ResMed Inc

Massive bottom-line growth In Q2FY19: ResMed Inc. (ASX: RMD) is a leading health company which provides cloud-connected health care services and devices to patients across 120 countries. The company has an expertise in treating Sleep Apnea and COPD with its award-winning and innovative devices and masks. 

The company had announced to distribute a dividend of USD 0.0370 per share. The ex-date for the dividend is on 6 February 2019, Wednesday with a record date of 7 February 2019. However, the dividend payment date is 14 March 2019, Thursday.  
 

Consolidated Quarterly and Half-Yearly Performance (Sources: Company Report)

The company on 25 January 2019 has announced its second quarter results for FY19. The revenue increased to $651.1 million in the December 31, 2018 quarter as compared to $601.3 million in the previous corresponding period, an increase by 8%, driven by strong sales across mask and device products. The net income increased by 1,208.0% to $124.6 Mn in Q2FY19, primarily attributed to the one-time transition tax recognized in the prior year period. The company invested $155.1 million in FY18 on research & developments with a focus on the growth and commercialization of new and innovative products.

Among the key ratios, the current ratio of the company stood at 2.44x for the quarter ended December 31, 2018, as compared to the previous corresponding quarter of 1.29x, up by 88.4% approximately. The pre-tax ROA, however, grew marginally by 0.3% and stood at 4.3% in Q2FY19 as compared to 4.0% in the previous corresponding period.

What to Expect Moving Forward: Going forward, the company will thrive on the strategies to expand the business operations & capitalize on growth through continuous product development and innovation in SDB products and in respiratory care products. The company would also expand the geographic presence, increase public and clinical awareness, and expand into the new clinical applications.

However, the stock of ResMed is currently trading at $12.960 with a significant decline of 10.435% during the day’s trade after device maker missed sales expectations with its second-quarter earnings results. However, it is trading at higher PE multiple of 48.38x. Given the backdrop of mixed performance reviews on a quarterly basis, we suggest that market participants should closely watch the stock at the current price of A$12.960.
 

Aristocrat Leisure Limited

Growth Witnessed in Important Metrics: Aristocrat Leisure Limited (ASX: ALL) is into manufacturing of gambling machine. The company is predominantly engaged in the development, design, and distribution of gaming platform, content, and systems mainly through its North Ryde site. Aristocrat Leisure Limited offers a wide range of products and services which include electronic gaming machine, casino management system, and slot machines among other things.


Earnings Summary and KPI (Source: Company Reports)

The operating revenue stood at $3,624.1 million in FY18 compared $2,453.8 Mn in FY17, an increase by more than 47% approximately on the reported basis driven by growth in Americas and ANZ as well as in Digital with organic growth in Product Madness along with two significant digital acquisitions. Normalized profit after tax and before amortization of acquired intangibles (NPATA) stood at $729.6 million for the period, representing a 34.3% increase compared to $543.4 million in the prior corresponding period (i.e. FY17), primarily driven by higher sales. Among the key financial ratios, the ROE and current ratio stood at 35.3% and 1.33x which is well above the industry median of 13.0% and 1.14x, although they decreased Y-O-Y by 560 bps and 27.4%, respectively. 
  
Going forward, Aristocrat Leisure Limited has a longer-term vision of strategy and growth, people and succession planning and improving business efficiency. The stock of Aristocrat, however, is currently trading at $24.210 with a market capitalization of ~$15.71 billion. It is trading at a PE multiple of 28.940x. The stock has generated a YTD return of 16.81% and yielded a return of 14.47% over the past one month. 

With the company’s long-term vision coupled with the robust financial performance and mixed short-term performance,we suggest investors to keep a close “Watch” on the stock and wait for another opportunity for investment entry at a lower price point.
 

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