Intuitive Surgical Inc. should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the lack of dividends, and the high PEmg and PB ratios. The Enterprising Investor is only concerned by the lack of dividends. 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 $13.63 for 2014. This is a strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 14.21% over the next 7-10 years. 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. (ISRG) for a greater perspective!
Disclaimer: The author did not hold a position in Intuitive Surgical Inc. (ISRG) 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.