Are Resmed CDI (ASX:RMD) shares good value in 2026? It's a question that's been on many investors' minds, especially given the -20.18% drop in share price since the beginning of the year. But, as with any investment, the answer isn't as straightforward as a simple yes or no. In this article, I'll take a deep dive into the world of Resmed CDI, exploring its business model, financial health, and potential value in 2026. Personally, I think that understanding the company's core metrics and broader context is key to making an informed decision. So, let's get started.
A Global Leader in Medical Equipment
Resmed CDI, originally founded in Australia by Peter Farrell, is now a global player in the medical equipment industry. With a presence in over 140 countries and 10,000+ employees, the company provides innovative solutions for sleep apnea and respiratory care. The Sleep and Respiratory Care business unit, in particular, stands out with its industry-leading CPAP machines. These machines are not just a treatment for sleep apnea; they are life-changing for patients who depend on them for daily support.
What makes Resmed CDI truly fascinating is its ability to leverage technology. By connecting its hardware (like masks and humidifiers) to SaaS data, the company drives insights, improves patient outcomes, and reduces healthcare costs. This is a powerful combination that sets Resmed CDI apart in the market.
Financial Health: A Mixed Bag
Now, let's dive into the numbers. Resmed CDI's financial health is a mixed bag, with some positive trends and some areas of concern. Here are the key metrics to consider:
Revenue Growth: With a compound annual growth rate (CAGR) of 13.6% over the last 3 years, Resmed CDI's revenue growth is impressive. This indicates a strong market position and the ability to generate sales consistently. However, it's important to note that this growth rate might be challenging to sustain in the long term.
Gross Margin: Resmed CDI's gross margin of 57.4% is healthy, suggesting that the company is making a good profit on its core products and services. This is a positive sign, but it's also important to consider the overhead costs and how they impact the overall profitability.
Profitability: The company's profitability has been on an upward trajectory, with a CAGR of 29.1% over the last 3 years. This is a significant improvement and indicates that Resmed CDI is becoming more efficient and effective in its operations.
Net Debt: Resmed CDI's net debt of -$624m is a red flag. A negative net debt suggests that the company has more cash than debt, which can be seen as a safety buffer. However, it also indicates that the company might be inefficient in its capital allocation. A more valuable metric here would be the debt/equity ratio, which Resmed CDI has managed to keep at a reasonable 18.0%.
Return on Equity (ROE): With an ROE of 22.7% in FY24, Resmed CDI is generating a healthy return on its equity. This indicates that the company is allocating its capital efficiently and creating value for shareholders.
Valuing Resmed CDI Shares
So, what does all this mean for the Resmed CDI share price? As a growth company, one way to value its shares is by comparing its price-to-sales multiple over time. Currently, Resmed CDI's shares are trading at a price-sales ratio of 4.38x, which is below its 5-year average of 8.70x. This could be a sign that the share price has fallen, or sales have increased, or both.
However, I believe that a more comprehensive approach is needed to value Resmed CDI shares. The Rask websites offer free online investing courses and valuation spreadsheets, which can be a great resource for investors. Models like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM) would provide a more accurate valuation of the company's shares.
Conclusion: A Complex Picture
In conclusion, Resmed CDI shares are not a simple yes or no investment. The company has a strong market position, innovative technology, and impressive financial metrics. However, there are also areas of concern, such as the net debt and the challenge of sustaining high revenue growth. As an investor, it's crucial to consider the broader context and use a variety of valuation techniques to make an informed decision. Personally, I think that Resmed CDI has the potential to be a good value investment in 2026, but it's essential to do your due diligence and consider all the factors before making a move.
