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"We rate MASIMO CORP (MASI) 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, notable return on equity, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MASI's revenue growth has slightly outpaced the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- 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, MASIMO CORP's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 77.32% to $28.03 million when compared to the same quarter last year. In addition, MASIMO CORP has also vastly surpassed the industry average cash flow growth rate of -40.55%.
- The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
- The gross profit margin for MASIMO CORP is rather high; currently it is at 67.86%. Regardless of MASI'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 10.31% trails the industry average.
- You can view the full analysis from the report here: MASI Ratings Report