Since September 2024, ResMed has been in a holding pattern, posting a small loss of 4.8% while floating around $233.10. The stock also fell short of the S&P 500’s 6.2% gain during that period.

Is now the time to buy RMD? Or does the price properly account for its business quality and fundamentals? Find out in our full research report, it’s free.

Why Does RMD Stock Spark Debate?

Founded in 1989 in Australia, ResMed (NYSE:RMD) is a medical device company specializing in products for chronic health conditions like sleep apnea, asthma, neuromuscular disorders, and others.

Two Things to Like:

1. Constant Currency Revenue Propels Growth

We can better understand Patient Monitoring companies by analyzing their constant currency revenue. This metric excludes currency movements, which are outside of ResMed’s control and are not indicative of underlying demand.

Over the last two years, ResMed’s constant currency revenue averaged 14.8% year-on-year growth. This performance was impressive and shows it can expand quickly on a global scale regardless of the macroeconomic environment.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

ResMed’s EPS grew at an astounding 17.3% compounded annual growth rate over the last five years, higher than its 12.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

One Reason to be Careful:

New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, ResMed’s ROIC decreased by 2.5 percentage points annually over the last few years. Only time will tell if its new bets can bear fruit and potentially reverse the trend.

Final Judgment

ResMed’s merits more than compensate for its flaws. With its shares lagging the market recently, the stock trades at 23.8× forward price-to-earnings (or $233.10 per share). Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More Than ResMed

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.