Have you been paying attention to shares of ResMed (RMD)? Shares have been on the move with the stock up 12.8% over the past month. The stock hit a new 52-week high of $263.05 in the previous session. ResMed has gained 12.7% since the start of the year compared to the 2.6% move for the Zacks Medical sector and the 24.8% return for the Zacks Medical - Products industry.
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 30, 2025, ResMed reported EPS of $2.43 versus consensus estimate of $2.3 while it beat the consensus revenue estimate by 1.57%.
For the current fiscal year, ResMed is expected to post earnings of $9.35 per share on $5.1 billion in revenues. This represents a 21.11% change in EPS on an 8.9% change in revenues. For the next fiscal year, the company is expected to earn $10.31 per share on $5.44 billion in revenues. This represents a year-over-year change of 10.2% and 6.54%, respectively.
ResMed may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
ResMed has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 27.6X current fiscal year EPS estimates, which is a premium to the peer industry average of 19.5X. On a trailing cash flow basis, the stock currently trades at 27.9X versus its peer group's average of 11.2X. Additionally, the stock has a PEG ratio of 1.86. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, ResMed currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if ResMed meets the list of requirements. Thus, it seems as though ResMed shares could have potential in the weeks and months to come.
Shares of RMD have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is ICU Medical, Inc. (ICUI). ICUI has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. ICU Medical, Inc. beat our consensus estimate by 27.20%, and for the current fiscal year, ICUI is expected to post earnings of $6.94 per share on revenue of $2.31 billion.
Shares of ICU Medical, Inc. have gained 5% over the past month, and currently trade at a forward P/E of 23.91X and a P/CF of 10.84X.
The Medical - Products industry may rank in the bottom 54% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for RMD and ICUI, even beyond their own solid fundamental situation.
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