ResMed's price-to-sales ratio of 4.76x is well below its five-year average of 8.70x, as healthcare spending growth projections and sticky demand draw investor attention.
Alpha Score of 61 reflects moderate overall profile with strong momentum, moderate value, moderate quality, weak sentiment.
ResMed shares are trading at a price-to-sales multiple of 4.76x, roughly half the company's five-year average of 8.70x. The compression comes as healthcare stocks draw interest for their stable revenue streams, even as the Australian healthcare index has lagged.
The S&P/ASX200 Healthcare Index returned an annualised -7.84% over the past five years, compared with 3.84% for the ASX 200. ResMed, a maker of cloud-connected CPAP machines and other respiratory devices, benefits from what analysts describe as sticky revenue. Healthcare spending is largely essential. During the 2008 financial crisis the sector was the best-performing part of the market.
Global healthcare outlays are projected to grow 7% a year through 2027, reaching $819 billion, according to industry estimates. Within that, healthcare IT and software-as-a-service companies are forecast to expand revenue at more than 15% annually from 2024 to 2030.
ResMed operates two main business units: Sleep and Respiratory Care, and SaaS. The Sleep unit sells CPAP machines, masks and humidifiers for obstructive sleep apnea. The SaaS unit provides software for durable medical equipment providers. The company's cloud-connected devices create a digital health network that generates data to improve patient outcomes, ResMed says.
A recent Morgan Stanley survey found that more than half of investors plan to increase their allocation to sustainable investments in 2024. Healthcare, as a sector providing essential public services, could attract that capital, the survey said.
For ResMed, the current price-to-sales ratio sits at roughly half its historical average. That could reflect a decline in the share price or rising revenue. Revenue has grown over the past three years, suggesting the multiple contraction is more a function of price movement than weak sales.
The stock's low multiple relative to its average offers a concrete data point for investors weighing the sector's steady demand against projected spending growth.
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