It's been a great morning session for Edwards Lifesciences investors, who saw their shares rise 1.1% to a price of $74.91 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Edwards Lifesciences's P/B and P/E Ratios Are Higher Than Average:
Edwards Lifesciences Corporation provides products and technologies for structural heart disease, and critical care and surgical monitoring in the United States, Europe, Japan, and internationally. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 24.45 and an average price to book (P/B) ratio of 4.16. In contrast, Edwards Lifesciences has a trailing 12 month P/E ratio of 34.0 and a P/B ratio of 7.14.
Edwards Lifesciences's PEG ratio is 3.0, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
An Exceptionally Strong Balance Sheet:
| 2018-02-16 | 2019-02-15 | 2020-02-14 | 2021-02-12 | 2022-02-14 | 2023-02-13 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $3,435 | $3,723 | $4,348 | $4,386 | $5,232 | $5,382 |
| Gross Margins | 75.0% | 75.0% | 74.0% | 75.0% | 76.0% | 80.0% |
| Operating Margins | 32% | 28% | 28% | 30% | 30% | 33% |
| Net Margins | 17.0% | 19.0% | 24.0% | 19.0% | 28.0% | 28.0% |
| Net Income (MM) | $584 | $722 | $1,047 | $823 | $1,503 | $1,522 |
| Net Interest Expense (MM) | -$3 | $2 | $12 | $8 | -$1 | $16 |
| Depreciation & Amort. (MM) | -$82 | -$77 | -$89 | -$107 | -$135 | -$140 |
| Earnings Per Share | $0.9 | $1.13 | $1.64 | $1.3 | $2.38 | $2.44 |
| EPS Growth | n/a | 25.56% | 45.13% | -20.73% | 83.08% | 2.52% |
| Diluted Shares (MM) | 648 | 641 | 637 | 632 | 632 | 624 |
| Free Cash Flow (MM) | $1,176 | $1,165 | $1,437 | $1,462 | $2,062 | $1,483 |
| Capital Expenditures (MM) | -$176 | -$239 | -$254 | -$407 | -$330 | -$265 |
| Net Current Assets (MM) | -$161 | $104 | $644 | $428 | $514 | $610 |
| Long Term Debt (MM) | $438 | $594 | $594 | $595 | $596 | $596 |
Edwards Lifesciences benefits from strong margins with a stable trend, an excellent current ratio, and healthy debt levels. The company's financial statements show wider gross margins than its peer group and a strong EPS growth trend. Furthermore, Edwards Lifesciences has weak revenue growth and a flat capital expenditure trend and irregular cash flows.
