Intuitive Surgical Co., Ltd. (ISRG – Free Report) has been one of the most-watched stocks by Zacks.com visitors lately. Therefore, we recommend considering several factors that can affect a stock's short-term performance.
Over the past month, the company's stock has returned +0.4%, compared to a +1.8% change in the Zacks S&P 500 Composite Index. During this period, the Zacks Medical – Equipment industry, which Intuitive Surgical belongs to, has declined by 0.7%. The key question here is: What is the future direction of the stock price?
While media releases and rumors about significant changes in a company's business prospects typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Regarding revisions to performance forecasts
At Zacks, we prioritize evaluating changes in company earnings estimates rather than focusing on anything else. This is because we believe that the fair value of a stock is determined by the present value of its future income stream.
Essentially, we look at how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Intuitive Surgical is expected to post earnings of $1.40 per share, representing a year-over-year change of +13.8%. The Zacks Consensus Estimate remained unchanged over the past 30 days.
The consensus earnings estimate for the current fiscal year of $6.18 represents a year-over-year change of +8.2%. This estimate has remained unchanged over the past 30 days.
Next year's consensus earnings estimate of $7.27 represents a +17.6% change from the revenue that Intuitive Surgical was expected to report a year ago. Estimates have not changed over the past month.
The Zacks Rank, a proprietary stock evaluation tool with a strong, outside-audited track record, leverages the power of earnings estimate revisions to provide a more definitive picture on near-term stock price direction. To do. The magnitude of the recent change in consensus estimates, along with three other factors related to earnings estimates, gives Intuitive Surgical a Zacks Rank #3 (Hold).
The chart below shows the evolution of the company's consensus EPS estimate for the next 12 months.
12 months EPS
Revenue growth forecast
There's no question that a company's revenue growth is the best indicator of its financial health, but if it's not profitable, nothing will happen. It's nearly impossible for a company to grow its revenue without growing its revenue over a long period of time. Therefore, it's important to know a company's earnings growth potential.
For Intuitive Surgical, the current quarter's consensus revenue estimate of $1.86 billion represents a year-over-year change of +9.9%. His $7.97 billion and $9.19 billion forecasts for the current and next fiscal year represent changes of +11.9% and +15.3%, respectively.
Last reported results and surprising details
Intuitive Surgical reported revenue of $1.93 billion in its last reported quarter. This represents a +16.5% year-over-year change. EPS for the same period was $1.60, compared to $1.23 a year ago.
The reported earnings represent a surprise of +0.02% when compared to the Zacks Consensus Estimate of $1.93 billion. EPS surprise was +8.84%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has surpassed consensus revenue estimates three times during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock's current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects is a key determinant of future stock performance.
Compare the current value of a company's valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to the company's value, as well as its historical value. Value helps determine whether a stock is valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
Zacks Value Style Score (part of the Zacks Style Scores system). We pay close attention to both traditional and non-traditional metrics and rate stocks from A to F (A is better than B, B is better than C, and A is better than B. is also very useful in identifying whether a stock is overvalued, well-valued, or temporarily undervalued.
Intuitive Surgical is rated D on this score, indicating that it trades at a premium relative to its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and many others on Zacks.com, may help you decide whether the market buzz surrounding Intuitive Surgical is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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