Edwards Lifesciences — A Good Value for Patient Investors?

Now trading at a price of $77.55, Edwards Lifesciences has moved 1.71% so far today. In contrast, the S&P 500 index moved 0.69%.

Edwards Lifesciences shares moved -32.54% over the last 52 weeks, with a high of $131.1 and a low of $67.13. During this time, the stock lagged the S&P 500 index by -23.31%. As of January 2022, the company's 50-day average price is $76.93. Edwards Lifesciences is an American medical technology company headquartered in Irvine, California, specializing in artificial heart valves and hemodynamic monitoring. The large-cap Basic Materials company is based in Irvine, CA. Edwards Lifesciences has returned a 0.0% dividend yield over the last 12 months.

The Company Has a Steady Stream of Positive Cash Flows and Low Debt:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $4,333 $4,383 $5,219 $5,362
Revenue Growth n/a 1.14% 19.08% 2.74%
Gross Margins 74.62% 75.42% 76.33% 80.23%
Gross Margins Growth n/a 1.07% 1.21% 5.11%
Operating Margins 26.47% 20.48% 32.39% 32.61%
Operating Margins Growth n/a -22.63% 58.15% 0.68%
Earnings Per Share $5.01 $1.32 $2.41 $2.5
EPS Growth n/a -73.65% 82.58% 3.73%
Free Cash Flow (MM) $904 $647 $1,402 $953
FCF Growth n/a -28.47% 116.74% -32.01%
Capital Expenditures (MM) $278 $407 $330 $265
Net Debt / EBITDA -0.47 -0.6 -0.14 -0.08

Edwards Lifesciences Is Currently Fairly Valued:

Compared to the Basic Materials sector's average of 10.03, Edwards Lifesciences has a trailing twelve month P/E ratio of 32.31 and, according to its EPS guidance of 2.85, an expected P/E ratio of None.

Edwards Lifesciences's P/B ratio is 7.54 compared to its sector average of 2.08. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 208.6% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 2.94 * 9.55) = $25.13

Edwards Lifesciences's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.

21 analysts are following Edwards Lifesciences and have set target prices ranging from $67.0 to $100.0 per share. On average, they have given the company a rating of buy. At the current price of $77.55, EW is trading -12.39% away from its average analyst target price of $88.52 per share, implying an analyst consensus of some upside potential for the stock.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.