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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Edwards Lifesciences Corporation (XNYS:EW) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
EW
Name:
EDWARDS LIFESCIENCES CORPORATION (XNYS:EW)
Sector:
220.60M
Industry:
Medical Devices
CEO:
Mr. Michael Mussallem
Total Employees:
15,700
Our Technological Advancement Rating
Our Rating:
A+
Technological advancement compared to industry is 731.74% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF EDWARDS LIFESCIENCES CORPORATION(EW) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND MEDICAL DEVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
88.69
One Month Price Target:
$89.26
Six Month Price Target :
$92.1
Likely Price in One Year's Time:
Ticker:
$95.5
Likely Trading Range Today Under (Normal Volatility)
$88.39
Price Upper limit ($) :
$89.07
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$84.61
This week:
$79.58
This month :
$70.46
Other Primary facts
Market Cap:
55.21B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
619.94M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
17.59%
-10.66%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$107.60
$98.91
$69.78
$78.47
Medium risk (<10%) entry points
Buy Call
Sell Call
$96.08
Buy Put:
Sell Put:
$94.23
$81.27
$83.15
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
EW
Sharpe Ratio:
1.66%
Comparison:
EW, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 9.81% higher than the industry
& is -27.03% lower than the market/S&P 500 average
Average Returns/Yield of
EW
Daily returns:
0.05%
Weekly returns:
0.23%
Monthly returns:
0.93%
Yearly returns:
15.36%
Comparison of returns:
Average annual returns/yield (last 3 years) is -27.43% below industry average
Classification:
EW, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.88
Statistical test of Returns:
EW has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.26%
Weekly Volatility:
5.05%
Monthly Volatility:
10.11%
Yearly Volatility:
35.02%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.77%
Volatility in last five trading days has been -65.73% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.60%
Weekly VaR:
-10.28%
Monthly VaR:
-20.55%
How Much Can the price of
EW
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-18%
Worst case (decline):
-71.19%
This translates to price declining to:
$73.04
This translates to price declining to:
$25.55
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
EW is a 45.05% riskier investment compared to the market/S&P 500 & is 24.27% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -28.01% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
EW
Beta in relation to market/S&P 500--1.14
Expected beta in 1 year's time:
0.973
Expected beta in 3 year's time:
1.376
Unlevered (debt free) Beta:
1.039
Beta in relation to Nasdaq (XNAS):
0.811
Beta in relation to all global stocks::
0.703
Beta Comparison & Analysis
Beta of competitors/peers::
0.927
Beta is 23.28% higher than peers
Average Industry Beta:
1.065
Beta is 7.35% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
22.54%
Sustainable growth rate is 73.05% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.002
Alpha is -96.63% below industry average alpha yield
Alpha is 11% compared to market & is healthy
Analysis of Cost of Capital of
EW
Equity cost of capital:
0.110
Equity cost of capital is 5.13% above industry mean WACC
Unlevered (without debt) cost of capital:
9.98%
Before-tax cost of debt:
0.16%
After-tax cost of debt:
0.13%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
0.13%
WACC is 30.04% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$8.64
Revenue growth rate per share of (3Y):
9.41
Annual revenue growth rate is -88.88% below industry average
EPS:
$2.44
Expected Annual growth rate of EPS (3Y):
12.39%
Expected future EPS growth rate is 6.95% higher than the Medical Devices industry
Free cash flow (FCF) per share:
$2.24
-
-
Debt per share
$1.07
EBITDA per share
$3.04
Valuation Analysis Today of
EW
P/E Ratio:
38.37
P/E Ratio of Competitors/Peers:
27.22
P/E ratio is 40.97% higher than main peers & is -84.24% lower than the industry
Stock price/value with industry average P/E ratio: $594.25
EW is -85.08% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
10.26
Price to sales ratio is 10.26% above the industry mean
P/B (Price to book value ratio):
9.41
Price to free cash flow: 39.56
Price to free cash flow ratio is -29.37% lower than the industry
Net income growth rate (3Y):
109.46%
Net income growth rate is 12.70% higher than the average industry net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
11.37%
Net debt to equity ratio:
-5.86%
Debt to assets ratio:
7.89%
Net debt to assets ratio:
-4.07%
Debt-to-asset ratio is -79.64% below industry average
Ability to repay debt:
Interest coverage ratio:
1715.45
Interest coverage ratio is 12760.23% more than industry average
Looking forward:
Debt growth rate:
-0.66%
Annual debt growth is -100% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.701
Statistical significance of correlation:
EW has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.468
Stock price is 49.81% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.468
Correlation of price movement with Nasdaq (^IXIC):
0.023
Covariance of price movement with the market:
0.03
Kurtosis
6.591
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.303
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
EW
Gross Profit Margin Ratio:
306%
Operating Profit Margin Ratio:
32.58%
Operating profit margin is -290.85% lower than the industry
Net Profit Margin Ratio:
306%
Effective Tax Rate:
12.03%
Effective tax rate is -78.11% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
26.32%
Return on equity (ROE) is -368.47% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
18.27%
Return on assets (ROA) is -642.00% lower than the industry
Financial Leverage:
1.1x
Current Ratio:
3.41
Current ratio is -47.22% below industry average
Cash Conversion Cycle (days):
39
Cash conversion cycle is -30.06% below industry average
The remaining useful life of property plant & equipment is: 4.4 years
Stock based compensation to net income ratio:
2.11%
In-depth Efficiency Analysis
Revenue generated per employee:
341.2K
Each employee generates -9% less revenue than industry average revenue per employee
EBITDA generated per employee:
120.2K
Each employee generates 1821% more EBITDA than industry average revenue per employee
Profit generated per employee:
98.0K
Each employee generates -430% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
14.1K
Each employee generates -199% less free cash flow than industry average revenue per employee
Assets/Capital per employee
329.8K
Each employee generates -199% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 18.72%
Growth rate in R&D investment/expenditure is -14375.95% lower than the industry
Competitors/Peer firms of
EW
CIGNA CORPORATION (XNYS:CI)
HCA HEALTHCARE, INC. (XNYS:HCA)
BECTON, DICKINSON AND COMPANY (XNYS:BDX)
STRYKER CORPORATION (XNYS:SYK)
ZOETIS INC. (XNYS:ZTS)
IQVIA HOLDINGS INC (XNYS:IQV)
ELEVANCE HEALTH, INC. (XNYS:ELV)
HUMANA INC. (XNYS:HUM)
CENTENE CORPORATION (XNYS:CNC)
Current Analyst Ratings
Strong buy�29%
Buy�38%
Hold�17%
Sell�0%
Strong sell�4%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
5.36B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.25B
4.10B
924.70M
-
1.53B
-
-
2.46B
600.00K
1.10M
137.10M
1.89B
1.75B
1.54B
1.75B
210.30M
1.54B
Statement of Cash Flow
Date:
Period:
34.70M
Differed Income Tax :
- 42600.00K
Stock Based Compensation :
32.40M
Change in Working Capital :
- 129400.00K
Accounts Receivables:
-
Other Working Capital:
69.90M
Other Non-Cash Items:
24.60M
Net Cash Provided by Operating Activities:
293.30M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 202100.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.03B
465.00M
1.50B
686.20M
730.60M
328.60M
3.24B
1.64B
1.17B
322.00M
1.62B
294.90M
129.40M
5.18B
-
8.42B
158.80M
23.90M
162.30M
-
767.20M
949.90M
664.30M
960.80M
1.63B
-
2.58B
642.90M
6.44B
- 186600.0K
- 1053100.00K
March 31, 2022 at 6:00:00 AM
3.71B
5.84B
8.42B
2.09B
688.20M
- 342700.0K
502.00M
- 70400.00K
229.50M
-
-
- 405600.00K
-
37.50M
- 368100.00K
13.20M
167.90M
1.04B
867.40M
293.30M
- 72700.00K
220.60M
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
EW
2023
2024
2025
2026
2027
$104.66
$112.70
$121.35
$130.68
$140.71