Ann: ResMed Announces Results for the Second Quarter of FY 2019, page-53

@zaidi675 ,

Not only have I looked at it, but I was a happy shareholder in the company for about a decade.

Trouble is, for most of RMD's listed life, its shares were rated at P/E multiples in the high teens and EV/EBITDA multiples around 12-14x.

Today, and has been the case for the past few years, the stock is being offered by the market to investors at P/E multiples north of 25x and EV/EBITDA multiples close to 20x.

As far as I can see, nothing structural or fundamental within the business or the industry in which Resmed operates has brought about that quite meaningful re-rating of the stock.

Rather, what I think has driven the more demanding valuation multiples for Resmed is the globe being awash with easy capital, courtesy of once-a-generation, accommodative global monetary policy.

We have seen this valuation dynamic across most asset classes in recent years.

Personally, I am a believer in mean reversion when it comes to most things economic and financial, so - if anything - I see more scope for RMD's valuation metrics to ease in the future, than remain where they are (let alone go back up to their peaks).

So, to answer you question about whether Resmed is at an attractive valuation:

While it is a superb business operating as the industry leader in a sector in which there is structurally growing demand, it is also priced for perfection, I think.

Remember the investing adage:

Quality is what you buy; Value is what you get.


NB. Qualifying Statement: I sold my RMD shares two years ago, when the share price was closer to $8.00, so take whatever I say within that context (!)
(although the RMD sale proceeds were redeployed into the purchase of CSL stock, so at least I get to save a bit of face)