Laser Eye Surgery and VISX - Part III: VISX Financials
Note: Part I of this summary contains information on the history of eye surgery. It can be found at
Message 11041441
Part II presents a brief history of VISX lasers and takes a very quick view of some competitors.
Message 11047099
A recent report by Market Guide showed that VISX was trading at high multiples:
Stock Price $95.5
P/E 88
P/Sales 33
P/Book 28
A review of financial results reveals very high growth rates. In viewing these numbers keep in mind what the manual states about defining the tornado (thanks Mike Buckley)
Page 8: "Companies in hypergrowth markets experience revenue and earnings growth that goes through the roof -- 30% to 40% quarter-over-quarter growth is not untypical."
Page 211: "... a simple rule of thumb for establishing the start of a tornado: When year-to-year growth approaches or exceeds 100%, and when quarter-to-quarter growth also is rapidly accelerating, a tornado has begun."
Market Guide noted that the company had a market cap of $6.1 billion with nearly 64 million shares outstanding and a 37 million shares float. The company shows no debt and a current ratio over 5. Return on equity and return on investment were both 49% while return on assets was 39%. Gross margin was 79%, operating margin was nearly 51% and the net profit margin came in at 38%. The three year annualized growth rate in sales was 100%.
In the last full year (ended 12/31/98) sales grew 95% and EPS grew 75%. Quarter over quarter sales growth is as follows:
q1 - 1998 +54%
q2 - 1998 +103%
q3 - 1998 +99%
q4 - 1998 +117%
q1 - 1999 +121%
q2 - 1999 +97%
Revenue for full year 1998 were $134 million. Sales for the most recent quarter (June 99) were $63 million.
VISX earned $0.22 per share in 1997, $0.375 in 1998 and, according to Zacks is projected to earn $1.30 in 1999 and $1.71 in 2000. Six brokers rate the company a strong buy, 3 rate it a buy, 2 rate it a hold.
The stock was split 2 for 1 during 1/99 and again 5/99 and it may well split again before the year is over. One source I checked showed this movement in the stock price (approximate).
1/98 $5.50
6/98 $15
12/98 $20
3/99 $50
6/99 $80
8/99 $95
WSRN.com shows strong institutional interest:
Number of Institutions Holding Shares: 336
Shares Held by Institutions: 69.5%
IBD recently showed these numbers in its stock tables:
98, 99, A, A, B
This means that the company outperformed 98% of all companies in EPS growth and 99% of companies in stock price relative strength. It's industry group relative strength is the highest (A) and the company's financial performance is also the highest (an "A" rating for sales+profit margin+ROE). The company only has a B accumulation/distribution rating meaning the stock is under accumulation (more buyers than sellers) but it did not rate the strongest category (A).
Clearly, VISX is racking up some impressive numbers. The question is, will this continue. So the next factors we must look at are the company's position in its market, the barriers to entry and the competitive threats. Part IV is coming.
StockHawk |
