Globus Medical currently trades at $75.69 per share and has shown little upside over the past six months, posting a middling return of 3.4%. However, the stock is beating the S&P 500’s 5.2% decline during that period.

Is GMED a buy right now? Or is this an overvalued company? Find out in our full research report, it’s free.

Why Does Globus Medical Spark Debate?

With operations spanning 64 countries and a portfolio of over 10 new products launched in 2023 alone, Globus Medical (NYSE:GMED) develops and sells implantable devices, surgical instruments, and technology solutions for spine, orthopedic, and neurosurgical procedures.

Two Positive Attributes:

1. Constant Currency Revenue Propels Growth

Investors interested in Medical Devices & Supplies - Specialty companies should track constant currency revenue in addition to reported revenue. This metric excludes currency movements, which are outside of Globus Medical’s control and are not indicative of underlying demand.

Over the last two years, Globus Medical’s constant currency revenue averaged 64.2% year-on-year growth. This performance was fantastic and shows it can expand quickly on a global scale regardless of the macroeconomic environment.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Globus Medical’s EPS grew at a spectacular 12.5% compounded annual growth rate over the last five years. This performance was better than most healthcare businesses.

One Reason to be Careful:

New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Globus Medical’s ROIC has unfortunately decreased. If its returns keep falling, it could suggest its profitable growth opportunities are drying up. We’ll keep a close eye.

Final Judgment

Globus Medical has huge potential even though it has some open questions, and after its recent outperformance in a weaker market environment, the stock trades at 21.5× forward price-to-earnings (or $75.69 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.

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