It hasn't been a great morning session for Intuitive Surgical investors, who have watched their shares sink by -4.4% to a price of $430.17. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Intuitive Surgical's Valuation Is in Line With Its Sector Averages:
Intuitive Surgical, Inc. develops, manufactures, and markets products that enable physicians and healthcare providers to enhance the quality of and access to minimally invasive care in the United States and internationally. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 22.94 and an average price to book (P/B) ratio of 3.19. In contrast, Intuitive Surgical has a trailing 12 month P/E ratio of 52.2 and a P/B ratio of 8.72.
Intuitive Surgical's PEG ratio is 2.36, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Wider Gross Margins Than the Industry Average of 42.49%:
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,358 | $5,710 | $6,222 | $7,124 | $8,352 | $10,065 |
| Gross Margins | 66% | 69% | 67% | 66% | 67% | 66% |
| Net Margins | 24% | 30% | 21% | 25% | 28% | 28% |
| Net Income (M) | $1,061 | $1,705 | $1,322 | $1,798 | $2,323 | $2,856 |
| Net Interest Expense (M) | $157 | $69 | $30 | $192 | $325 | $366 |
| Depreciation & Amort. (M) | $221 | $280 | $326 | $382 | $439 | $600 |
| Diluted Shares (M) | 361 | 366 | 362 | 357 | 362 | 363 |
| Earnings Per Share | $2.94 | $4.66 | $3.65 | $5.03 | $6.42 | $7.87 |
| EPS Growth | n/a | 58.5% | -21.67% | 37.81% | 27.63% | 22.59% |
| Avg. Price | $209.13 | $303.7 | $261.19 | $337.36 | $520.78 | $450.06 |
| P/E Ratio | 68.57 | 62.88 | 70.59 | 65.76 | 79.03 | 56.19 |
| Free Cash Flow (M) | $1,143 | $1,750 | $958 | $750 | $1,304 | $2,491 |
| CAPEX (M) | $342 | $340 | $532 | $1,064 | $1,111 | $540 |
| Current Ratio | 6.86 | 5.08 | 4.4 | 4.76 | 4.07 | 4.87 |
Intuitive Surgical benefits from rapidly growing revenues and increasing reinvestment in the business, generally positive cash flows, and an excellent current ratio of 4.87. The company's financial statements show wider gross margins than its peer group and a strong EPS growth trend.
