Peers for Edwards Lifesciences Corp (NYSE:EW) include Medtronic, Inc. (NYSE:MDT), St. Jude Medical, Inc. (NYSE:STJ), Baxter International Inc. (NYSE:BAX), and Becton, Dickinson and Co. (NYSE:BDX). All four of these peers trade within a range of 13 to 17 times their trailing earnings, meaning that Edwards is valued at a premium relative to similar companies. Generally low growth is expected at these peers as well, and so all four are cheaper than Edwards on a forward earnings basis as well. However, recent financial performance has been lackluster: St. Jude actually reported a decline in revenue in its most recent quarter compared to the same period in the previous year, with the other three businesses seeing no more than a 4% increase on the top line.
We are skeptical that Edwards Lifesciences Corp (NYSE:EW) can continue to grow its pretax income at the high rates it did in Q1 without higher revenue growth as well, and so even with the insider purchase we are doubtful that the stock is a good value. The company actually does not look too expensive compared to its peers, demonstrating at least moderate increases in sales while the other four businesses we looked at struggled to some degree. However, we would conclude that the industry as a whole does not appear to be a good source of value rather than that there is some case for Edwards Lifesciences Corp (NYSE:EW) on that basis.
Disclosure: I own no shares of any stocks mentioned in this article.