ResMed Inc (RSMDF) stock analysis

P/E below its 5-year median

ResMed's P/E of 22.0 is below its own 5-year median of 31.2.

P/E below the industry

ResMed's P/E of 22.0 is below the Surgical, Medical, and Dental Instruments and Supplies median of 26.9.

EV/EBITDA below its 5-year median

ResMed's EV/EBITDA of 15.3 is below its 5-year median of 21.4.

P/B above the industry

ResMed's price-to-book of 5.04 is above the Surgical, Medical, and Dental Instruments and Supplies median of 3.11.

Trading below fair value

The share price of $229.94 is below our fair value estimate of $259.82.

Margin of safety under 20%

The price is 11.5% below fair value, less than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 10.2% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 19.6% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 8.8% over the last twelve months, against a 5-year average of 26.3% a year.

Growing slower than the industry

Revenue grew 9.9% over the last twelve months; the Surgical, Medical, and Dental Instruments and Supplies median is 10.4%.

Guidance issued

The latest outlook (FY 2027 Non-GAAP Diluted EPS, Oct 29, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 61.1% over the last twelve months, against 59.4% a year earlier.

Return on equity over 15%

Return on equity was 24.3% over the last twelve months and averaged 24.4% over five years.

Return on capital over 10%

Return on invested capital was 29.5%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

ResMed's return on equity of 24.3% is above the Surgical, Medical, and Dental Instruments and Supplies median of -35.2%.

Earnings grew over 5 years

Net income grew 26.3% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 26.9% over the last twelve months, against a 5-year average of 23.8%.

Net margin above the industry

ResMed's net margin of 26.9% is above the Surgical, Medical, and Dental Instruments and Supplies median of -15.8%.

Low debt

Debt is 3.9% of shareholders' equity, under the 40% we consider low.

Debt rising against equity

Debt to equity rose from 0.4% five years ago to 3.9%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 695% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 3.10 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 11.21; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

ResMed paid dividends worth 1.1% of the share price over the last twelve months.

Yield below Treasuries

The 1.1% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 4.0% or more; ResMed yields 1.1%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 23.0% of net income.

Covered by free cash flow

Dividends take 21.2% of free cash flow.