Intuitive Surgical Inc. Quarterly Valuation – December 2014 $ISRG


Intuitive Surgical should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the lack of dividend payments as well as the high PEmg and PB ratios, while the Enterprising Investor is only concerned initially by the lack of dividend payments. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $6.38 in 2010 to an estimated $14.96 for 2014. This is very strong and an impressive level of demonstrated growth which is in line with the market’s implied estimate for earnings growth of 13.03% over the next 7-10 years. In fact, actual historical growth is about 26.89% per year, clearly unsustainable, but the market is aware of that and has priced in a drop in the level of growth. The ModernGraham valuation model therefore returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

Be sure to check out previous ModernGraham valuations of Intuitive Surgical Inc. for more perspective!

Read the full valuation on Seeking Alpha!

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Disclaimer:  The author did not hold a position in Intuitive Surgical (ISRG) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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