we think that Intuitive Surgical Stock (NASDAQ:ISRG) is currently . better pickup than Edwards Lifesciences (NYSE:EW), a medical technology company specializing in artificial heart valves and hemodynamic monitoring, while Intuitive Surgical is the more expensive of the two. ISRG trades at approximately 22x trailing revenue, compared to only 14x for Edwards Lifesciences. Although both companies have benefited from increases in total procedure volume after the pandemic, Intuitive Surgical’s financial performance has outperformed in recent years. However, there is much more to compare. Let’s step back to see a full picture of the relative valuations of both companies looking at historical revenue growth as well as operating margin growth. our dashboard Intuitive Surgical Vs Edwards Lifesciences, industry peers; Which stock is the better bet? There is more detail on this. The excerpts of the analysis are summarized below.
1. Intuitive Surgical Revenue Growth Has Been Strong
Now, Intuitive Surgical’s revenue growth over the past twelve-month period was better than Edwards Lifesciences (27% versus 17%), seeing a sharp rebound in total procedure volume, resulting in more da Vinci System placements. Even if we look at the longer term, Intuitive Surgical’s CAGR of 11.6% in the last three fiscal years is higher than the 8.5% CAGR for Edwards Lifesciences.
Looking ahead, Intuitive Surgical is expected to see strong revenue growth coupled with increasing demand for robotic surgical systems. For Edwards Lifesciences
2. Intuitive Surgical is more profitable
Similar to the pattern seen in revenue growth, Intuitive Surgical’s last three-year average operating margin of 29% is up from 22% for Edwards Lifesciences. Both companies have seen a rebound in operating margins in recent quarters, and operating margins for the past twelve months are up over 32% for both companies. This compares with figures of 31% for Intuitive Surgical and 26% in 2019 for Edwards Lifesciences, before the pandemic. Overall, Intuitive Surgical’s margins have been better than Edwards Lifesciences. That said, margins of both companies are likely to be adversely impacted in the near term due to inflationary pressures and supply chain headwinds, but growth in the long run.
net of it all
Now that nearly 60% of the US population is fully vaccinated against COVID-19, overall economic activity is seeing strong growth, with demand for medical devices likely to increase going forward, which is good for both companies. Is. As the COVID-19 crisis eases, the demand for sales of medical equipment will also return to normal once the backlog of procedures is cleared. However, for Intuitive Surgical, its growth outlook is dependent on new placements for its da Vinci system and is likely to remain high in the coming years given limited competition and increasing procedure volume.
Covid-19 is proving more difficult than initially thought, due to the spread of more infectious virus variants and infections in the US being higher than they were a few months ago, despite becoming a mother in October. This can directly affect the volume of the process in some geographic areas in the near term. That said, both companies have seen a strong rebound in demand since the pandemic. While Edwards Lifesciences’ current valuation is certainly more attractive than that of Intuitive Surgical, EW stock trading with nearly 14x trailing revenue, versus 22x for Intuitive Surgical, the latter demonstrating superior revenue growth and improved profitability over the past few years. has done.
Not only that, even if we look at financial exposure, Intuitive Surgical has no significant debt, while its 63% cash as a percentage of assets is even better than Edwards Lifesciences’ figure of 22%. Overall, Intuitive Surgical outpaces Edwards Lifesciences in most metrics that matter to investors, and we think the difference in valuation between Intuitive Surgical and Edwards Lifesciences is fairly justified. In fact, looking ahead, it is likely that the valuation gap of these two companies will persist in the near future and Intuitive Surgical may continue to outperform with its superior growth prospects and lower risk appetite.
While ISRG stock could see higher levels, 2020 has created several pricing discontinuities that could provide lucrative trading opportunities. For example, you’d be surprised how intuitive it is to approach stock valuations. Abbott vs Corcept,
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Returns Nov’21 MTD  YTD  2017-21 
ISRG Return -6% 21% 367%
EW Return -6% 20% 251%
S&P 500 Returns 1% 22% 105%
Trefis MS Portfolio Returns -3% 46% 297%
 Month-to-date and Year-to-date as of 11/29/2021
 Cumulative Total Return since 2017
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