Merit Medical Systems may be overvalued with poor growth indicators, but the 8 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $74.0 to $88.0 per share, for an average of $80.38. At today's price of $81.47, Merit Medical Systems is trading 1.36% away from its average target price, suggesting there is an analyst consensus of little upside potential.
Merit Medical Systems, Inc. designs, develops, manufactures, and markets single-use medical products for interventional, diagnostic, and therapeutic procedures, primarily in cardiology, radiology, oncology, critical care, and endoscopy. Based in South Jordan, UT, the mid-cap Health Care company has 6,846 full time employees. Merit Medical Systems has not offered a dividend during the last year.
Merit Medical Systems has a trailing twelve month P/E ratio of 63.6, compared to an average of 24.45 for the Health Care sector. Based on its EPS guidance of 3.15, the company has a forward P/E ratio of 25.9. Based on the 99.4% compound average growth rate of Merit Medical Systems's historical and projected earnings per share, the company's PEG ratio is 0.57. This EPS growth rate is likely not sustainable, so will substitute the broader market's 5-year projected EPS growth rate of 11.6%, which gives us a PEG ratio of 4.85. This suggests that these shares are overvalued.
In contrast, the market is undervaluing Merit Medical Systems in terms of its equity because its P/B ratio is 4.1. In comparison, the sector average is 4.16. The company's shares are currently trading 438.2% above their Graham number, implying that they are overvalued in terms of earnings and book value.
So why are analysts giving MMSI a good rating? We believe analysts could be encouraged by the company's impressive 110.9% rate of cash flow growth over the last 4 years. They might also believe Merit Medical Systems's positive margin growth trend will continue.
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $995 | $964 | $1,075 | $1,151 |
| Revenue Growth | n/a | -3.11% | 11.5% | 7.09% |
| Gross Margins | 43.5% | 41.6% | 45.2% | 45.1% |
| Gross Margins Growth | n/a | -4.37% | 8.65% | -0.22% |
| Operating Margins | 4.0% | 4.8% | 7.3% | 8.8% |
| Operating Margins Growth | n/a | 20.0% | 52.08% | 20.55% |
| Net Margins | 0.55% | -1.02% | 4.51% | 6.47% |
| Net Margins Growth | n/a | -285.45% | 542.16% | 43.46% |
| Earnings Per Share | $0.1 | -$0.18 | $0.84 | $1.28 |
| EPS Growth | n/a | -280.0% | 566.67% | 52.38% |
| Diluted Shares (MM) | 56 | 55 | 57 | 57 |
| Free Cash Flow (MM) | -$4 | $116 | $119 | $69 |
| FCF Growth | n/a | 3248.59% | 2.84% | -41.94% |
| Capital Expenditures (MM) | -$81 | -$49 | -$28 | -$45 |
| Net Debt / EBITDA | 3.41 | 2.98 | 1.2 | 0.83 |
