Insulet (PODD): A Significantly Undervalued Gem in the Medical Devices Industry

Insulet Corp (

PODD, Financial) has experienced a daily loss of -3.87%, and a 3-month loss of -34.21%. Despite these figures, the company’s Earnings Per Share (EPS) stands at 0.89. The question that arises is: Is Insulet (PODD) significantly undervalued? This article delves into an in-depth valuation analysis of the company to answer this crucial question. Read on for an enlightening evaluation.

Company Introduction

Established in 2000, Insulet Corp aimed to simplify continuous subcutaneous insulin infusion therapy for diabetes. The company developed the Omnipod system, a small disposable insulin infusion device controllable via a smartphone for dosage regulation. Approved by the U.S. Food and Drug Administration in 2005, the Omnipod is now used by approximately 360,000 insulin-dependent diabetics globally. With a market cap of $14.70 billion and a stock price of $210.6 per share, Insulet’s GF Value stands at $364.29, indicating that the stock may be significantly undervalued.

Understanding GF Value

The GF Value is a unique measure of a stock’s intrinsic value, calculated based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides an overview of the stock’s ideal fair trading value. If a stock’s price is significantly above the GF Value Line, it is likely overvalued, and its future return may be poor. Conversely, if it is significantly below the GF Value Line, it is likely undervalued, and its future return may be higher.

Insulet Corp (

PODD, Financial) is estimated to be significantly undervalued based on GuruFocus’ valuation method. Given that the stock is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.

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Financial Strength

Investing in companies with low financial strength could result in permanent capital loss. Therefore, a company’s financial strength should be carefully reviewed before deciding to buy shares. Insulet has a cash-to-debt ratio of 0.46, which ranks worse than 77.78% of companies in the Medical Devices & Instruments industry. Based on this, GuruFocus ranks Insulet’s financial strength as 5 out of 10, suggesting a fair balance sheet.

Profitability and Growth

Companies that have been consistently profitable over the long term offer less risk for investors. Insulet has been profitable 5 over the past 10 years. Over the past twelve months, the company had a revenue of $1.50 billion and Earnings Per Share (EPS) of $0.89. Its operating margin is 5.82%, which ranks better than 58.23% of companies in the Medical Devices & Instruments industry. Overall, the profitability of Insulet is ranked 6 out of 10, which indicates fair profitability.

Growth is probably the most important factor in the valuation of a company. The 3-year average annual revenue growth rate of Insulet is 16.4%, which ranks better than 70.86% of companies in the Medical Devices & Instruments industry. The 3-year average EBITDA growth rate is 8.1%, which ranks worse than 51.86% of companies in the Medical Devices & Instruments industry.

ROIC vs WACC

Another method of determining the profitability of a company is to compare its return on invested capital (ROIC) to the weighted average cost of capital (WACC). When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Insulet’s return on invested capital is 5.68, and its cost of capital is 8.93.

Conclusion

In conclusion, the stock of Insulet (

PODD, Financial) is estimated to be significantly undervalued. The company’s financial condition is fair, and its profitability is fair. Its growth ranks worse than 51.86% of companies in the Medical Devices & Instruments industry. To learn more about Insulet stock, you can check out its 30-Year Financials here.

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