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Q1 Earnings Preview for ResMed (NYSE:RMD)

in EARNINGS/INVESTING IDEAS by

ResMed Inc. (NYSE:RMD) is scheduled to report Q1 earnings results after markets close for trading on October 29, 2020.

The company is expected to report earnings of $0.99/share on revenue of $700.2 million. The consensus earnings per share (EPS) of $0.99/share is based on a poll of 8 analysts and represents a growth in eps of 6.8% over the same quarter last year, when the company reported earnings of $0.93/share.

The revenue forecast of $700.2 million based on a poll of 10 analysts implies a year-over-year (YoY) growth in revenue of 2.8%. Last year the company reported $681.1 million in revenue for the quarter.

Expected to report EPS growth of 6.8% for Q1, 2021
Metric Expected Prior Year YoY Change
Revenue $700.15 $681.06 2.8%
EPS $0.99 $0.93 6.8%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from ResMed Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2020 $1.07 $1.33 24.3% Beat
Q3, 2020 $1.08 $1.29 19.4% Beat
Q2, 2020 $1.03 $1.21 18.0% Beat
Q1, 2020 $0.87 $0.93 6.6% Beat
Q4, 2019 $0.92 $0.95 3.4% Beat
Q3, 2019 $0.85 $0.89 4.1% Beat
Q2, 2019 $0.95 $1 5.2% Beat
Q1, 2019 $0.79 $0.81 2.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −13.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $202.77 $175.52 −13.4% Decline
April 30, 2020 $156.31 $159.07 1.8% Increase
January 30, 2020 $165.84 $158.97 −4.1% Decline
October 24, 2019 $126.74 $144.26 13.8% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.72, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.72 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

ResMed Inc. is currently trading at $180.53/share, down −1.4% for the day. The company is trading at approximately 86.4% of its 52-week high of $209/share. The company’s stock price is up 2.9% since the last earnings report and up 0.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 59.95 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:RMD Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 42.08 and a forward P/E multiple of 38.44.

ResMed Inc.’s current share price also implies a price-to-book (P/B) multiple of 10.48. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q4
Period End Date June 30, 2020
Stock Price (Current) $180.53
P/E Ratio 42.1x
P/E Ratio (Fwd) 38.4x
PEG Ratio 0.8
Total Debt / Total Capital 4.7%
Levered Free Cash Flow $706.9 million
EV / EBITDA 29.2x

Finbox

ResMed Inc. is a large-cap stock with a market capitalization of $26.16 billion and a total enterprise value of $26.996 billion. The company operates in the Healthcare sector and the Healthcare Equipment & Supplies industry.

ResMed Inc. develops, manufactures, distributes, and markets medical devices and cloud-based software applications that diagnose, treat, and manage respiratory disorders comprising sleep apnea, chronic obstructive pulmonary disease, neuromuscular disease, and other chronic diseases. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, portable oxygen concentrators, and cloud-based software informatics solutions to manage patient outcomes, as well as provides customer and business processes. The company also provides U-Sleep, which enables automated patient coaching through a text, email, or interactive voice phone call; AirView that enables remote monitoring, over-the-air trouble shooting, and changing of device settings; and myAir, a patient engagement application that offers sleep data and a daily score based on their previous night’s data, as well as connectivity module and propeller solutions. In addition, it provides business management software and services to out-of-hospital providers, home medical equipment, pharmacy, home infusion, orthotics, and prosthetics; and HEALTHCAREfirst and MatrixCare solutions. The company markets its products to sleep clinics, home healthcare dealers, patients, hospitals, physicians, and third-party payers through a network of distributors and direct sales force in approximately 140 countries. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.

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