NEW YORK (TheStreet) -- Shares of Edwards LIfesciences Corp. (EW - Get Report) are up 1.53% to $87.80 in pe-market trade after Medtronic, Inc. (MDT - Get Report) agreed to pay at least $1.1 billion to settle a patent dispute over their Edwards' minimally invasive valves.
Medtronic shares are down slightly in pre-market trade.
TheStreet Ratings team rates EDWARDS LIFESCIENCES CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate EDWARDS LIFESCIENCES CORP (EW) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EW's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 5.2%. 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.
- Net operating cash flow has significantly increased by 59.10% to $138.90 million when compared to the same quarter last year. In addition, EDWARDS LIFESCIENCES CORP has also vastly surpassed the industry average cash flow growth rate of 5.14%.
- Despite currently having a low debt-to-equity ratio of 0.54, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.19 is very high and demonstrates very strong liquidity.
- The gross profit margin for EDWARDS LIFESCIENCES CORP is currently very high, coming in at 75.17%. Regardless of EW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.54% trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: EW Ratings Report