Stock of the Day

February 12, 2020

ResMed (RMD)

$240.03
-$0.30 (-0.1%)
Market Cap: $34.67B

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 $293, reflecting a strong performance over the past year.
  • ResMed Inc. reported a significant increase in quarterly revenue, up 8.6% year-over-year, indicating robust demand for its products.
  • The company has a solid return on equity of 25.58%, showcasing effective management and profitability.
  • ResMed Inc. has a low debt-to-equity ratio of 0.06, suggesting a strong balance sheet and lower financial risk.
  • The recent increase in the quarterly dividend to $0.66 per share, with a yield of approximately 1.2%, demonstrates the company's commitment to returning value to shareholders.

ResMed Bear Case

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

  • Despite recent revenue growth, the company's earnings per share (EPS) growth may not keep pace with market expectations, with analysts predicting an EPS of 12.03 for the current fiscal year.
  • The dividend payout ratio is relatively low at 23.01%, which may indicate that the company is retaining a significant portion of its earnings for reinvestment rather than returning to shareholders.
  • Market competition in the medical device sector is intensifying, which could impact ResMed Inc.'s market share and pricing power.
  • Potential regulatory changes in the healthcare industry could pose risks to the company's operations and profitability.
  • While the company has a strong product portfolio, reliance on specific product lines may expose it to market fluctuations and demand variability.
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