Stock of the Day

February 12, 2020

ResMed (RMD)

$292.73
+$4.39 (+1.5%)
Market Cap: $42.85B

About ResMed

ResMed Inc. develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including ApneaLink Air, a portable diagnostic device that measures oximetry, respiratory effort, pulse, nasal flow, and snoring; and NightOwl, a portable, cloud-connected, and disposable diagnostic device that measures AHI based on derived peripheral arterial tone, actigraphy, and oximetry over several nights. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients' device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME) to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies; and MEDIFOX DAN's software solutions. The company markets its products to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.

ResMed Bull Case

Here are some ways that investors could benefit from investing in ResMed Inc.:

  • The current stock price is around $264, which reflects a strong performance in the medical equipment sector.
  • ResMed Inc. recently reported earnings per share of $2.55, exceeding analysts' expectations, indicating robust financial health and effective management.
  • The company has shown a year-over-year revenue growth of over 10%, suggesting a strong demand for its products and services.
  • ResMed Inc. has a solid net margin of over 27%, which demonstrates its ability to convert revenue into profit efficiently.
  • The recent increase in the quarterly dividend to $0.60 per share, up from $0.53, reflects the company's commitment to returning value to shareholders.

ResMed Bear Case

Investors should be bearish about investing in ResMed Inc. for these reasons:

  • The price-to-earnings ratio of approximately 30 suggests that the stock may be overvalued compared to its earnings, which could deter value-focused investors.
  • Despite strong revenue growth, the company's beta of 0.77 indicates lower volatility, which may not appeal to investors seeking high-risk, high-reward opportunities.
  • The dividend yield of 0.8% is relatively low, which may not attract income-focused investors looking for higher returns from dividends.
  • ResMed Inc. operates in a competitive market, and any potential disruptions in the healthcare sector could impact its performance.
  • The company's payout ratio of 25.24% suggests that a significant portion of earnings is being returned to shareholders, which may limit funds available for reinvestment in growth opportunities.
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