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ResMed Q4 Preview: Rebound Quarter Inbound?

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Over the last month, one sector that has lagged the general market is the Zacks Medical Sector, down nearly 3%. Below is a table illustrating the sector’s performance vs. the S&P 500 over several timeframes.

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Image Source: Zacks Investment Research

A unique company within the sector, ResMed (RMD - Free Report) , is on deck to reveal Q4 2022 results after market close on Thursday, August 11th.

ResMed is a designer, manufacturer, and worldwide distributor of generators, masks, and related accessories for treating sleep-disordered breathing (SDB) and other respiratory disorders.

As it stands, the company carries a Zacks Rank #4 (Sell) with an overall VGM Score of a D. Let’s see how the sleeping giant stacks up heading into the print.

Share Performance & Valuation

ResMed shares have been notably stronger than the S&P 500 year-to-date, declining 6% and providing shareholders with a valuable layer of defense.

Zacks Investment Research
Image Source: Zacks Investment Research

The price action of RMD shares has been even more remarkable over the last three months, up nearly 30% and absolutely crushing the S&P 500’s 5% gain.

Zacks Investment Research
Image Source: Zacks Investment Research

However, the company’s valuation levels appear elevated. ResMed’s 35.9X forward earnings multiple resides on the steep side, representing a rich 63% premium relative to its Zacks Medical Sector.

In addition, RMD carries a Style Score of a D for Value.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Estimates

The Consensus Estimate Trend has remained unchanged over the last 60 days, with zero analysts revising their outlook. Still, the quarterly EPS estimate of $1.48 pencils in a solid 10% year-over-year uptick in earnings.

Zacks Investment Research
Image Source: Zacks Investment Research

Pivoting to the top-line, the Zacks Consensus Sales Estimate of $917 million pencils in a modest 4.7% increase compared to year-ago quarterly sales of $876 million.

Quarterly Performance & Market Reactions

RMD has primarily exceeded the Zacks Consensus EPS Estimate, with eight bottom-line beats over its last ten quarters. However, the company registered an 8% EPS miss in its latest quarter.

Quarterly sales numbers have also faced turbulence as of late, with RMD registering back-to-back revenue misses. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Additionally, the market hasn’t been impressed with RMD’s quarterly results, with shares moving down following the print in five of the last six instances.

Putting Everything Together

ResMed shares have been notably strong year-to-date, and the price action has been even stronger over the last three months. Still, shares trade at steep valuation multiples.

Quarterly estimates reflect solid growth within the top and bottom-lines, and analysts have been quiet for the quarter to be reported, with no estimate revisions.

Furthermore, the company’s quarterly results have left some to be desired as of late, and shares have moved downwards following five of its last six quarterly prints.

Heading into the release, ResMed (RMD - Free Report) carries a Zacks Rank #4 (Sell). 

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