Number of the day - 13.38

 

"The chart above shows Intuitive's trends in Revenue ($ Billion), Operating Margin, Roce (Return on Capital Employed), and Capital Turnover over the last 10 years. Turnover records constant growth with a CAGR of 10.9% (from 2.2 $B to 6.1 $B). The data underlines important growth in a market with excellent growth prospects. Operating Margin and Roce, on the other hand, recorded a downward trend, passing respectively from 40.3% to 27.1% and from 24% to 13.8%. 

The second graph shows the trend of the main operating expenses as a turnover percentage.The first fact that deserves attention is related to the increase in R&D costs. These costs have almost doubled from 7.8% to 13.38%, eroding more than 5 percentage points on the operating margin. This isn't necessarily a bad thing as the company itself quotes in the last Annual Report (Form 10-K):

"we expect to continue to make substantial investments in research and development and anticipate that research and development expenses will continue to increase in the future"

The world's highest-paying companies' R&D expenditure in the same sector is 15.8%. In this context, Intuitive Surgical with its 13.38% is approaching first place overall." 

Source: Seeking Alpha