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Post-Market Laggard: ResMed (RMD)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified ResMed ( RMD) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified ResMed as such a stock due to the following factors:

  • RMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.8 million.
  • RMD is down 4.1% today from today's close.

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More details on RMD:

ResMed Inc., through its subsidiaries, engages in the development, manufacture, and distribution of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders. The stock currently has a dividend yield of 1.9%. RMD has a PE ratio of 25.0. Currently there are 7 analysts that rate ResMed a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for ResMed has been 1.0 million shares per day over the past 30 days. ResMed has a market cap of $7.5 billion and is part of the health care sector and health services industry. The stock has a beta of 0.73 and a short float of 20.8% with 27.68 days to cover. Shares are up 26.4% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ResMed as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 26.1%. Since the same quarter one year prior, revenues rose by 11.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • RMD's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RMD has a quick ratio of 2.10, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, RESMED INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for RESMED INC is rather high; currently it is at 66.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.61% is above that of the industry average.
  • Net operating cash flow has increased to $123.92 million or 27.78% when compared to the same quarter last year. In addition, RESMED INC has also vastly surpassed the industry average cash flow growth rate of -60.73%.

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