We've been asking ourselves recently if the market has placed a fair valuation on Edwards Lifesciences. Let's dive into some of the fundamental values of this Large-Cap Health Care company to determine if there might be an opportunity here for value-minded investors.
Edwards Lifesciences's Valuation Is in Line With Its Sector Averages:
Edwards Lifesciences Corporation provides products and technologies for structural heart disease and critical care 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 26.07 and an average price to book (P/B) ratio of 3.53. In contrast, Edwards Lifesciences has a trailing 12 month P/E ratio of 28.3 and a P/B ratio of 4.53.
Edwards Lifesciences has moved 0.7% over the last year compared to 25.4% for the S&P 500 — a difference of -24.7%. Edwards Lifesciences has a 52 week high of $96.12 and a 52 week low of $58.93.
Wider Gross Margins Than the Industry Average of 41.35%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $3,723 | $4,348 | $4,386 | $5,232 | $5,382 | $6,005 |
| Gross Margins | 75% | 74% | 75% | 76% | 80% | 77% |
| Net Margins | 19% | 24% | 19% | 28% | 28% | 23% |
| Net Income (M) | $722 | $1,047 | $823 | $1,503 | $1,522 | $1,402 |
| Net Interest Expense (M) | $30 | $21 | $16 | $18 | $19 | $18 |
| Depreciation & Amort. (M) | $77 | $89 | $107 | $135 | $140 | $145 |
| Diluted Shares (M) | 641 | 637 | 632 | 631 | 624 | 609 |
| Earnings Per Share | $1.13 | $1.64 | $1.3 | $2.38 | $2.44 | $2.3 |
| EPS Growth | n/a | 45.13% | -20.73% | 83.08% | 2.52% | -5.74% |
| Avg. Price | $47.43 | $66.6 | $76.09 | $102.64 | $107.47 | n/a |
| P/E Ratio | 41.24 | 39.64 | 58.08 | 42.59 | 44.05 | nan |
| Free Cash Flow (M) | $688 | $928 | $647 | $1,406 | $974 | $643 |
| CAPEX (M) | $239 | $254 | $407 | $326 | $245 | $253 |
| EV / EBITDA | 36.05 | 33.11 | 46.92 | 34.98 | 35.38 | nan |
| Total Debt (M) | $594 | $594 | $595 | $596 | $596 | $597 |
| Net Debt / EBITDA | -0.15 | -0.47 | -0.59 | -0.15 | -0.09 | -0.32 |
| Current Ratio | 2.61 | 3.31 | 3.46 | 3.08 | 3.03 | 3.38 |
Edwards Lifesciences benefits from an excellent current ratio of 3.38, growing revenues and a flat capital expenditure trend, and wider gross margins than its peer group. The company's financial statements show a strong EPS growth trend and healthy leverage levels. Furthermore, Edwards Lifesciences has positive cash flows.
