Buffett Brain · Research note
Score updated 26 Sept 2026
RMD· Healthcare
ResMed
ResMed's 19.6% ROIC and 34% operating margin show a strong moat, but valuation at 19.6x P/E is stretched.
Buffett fit
Strong fit
Owner
72
Durability
98
Management
65
Price
54
Score updated 26 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Healthcare stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned 100% of ResMed, we'd be pleased with the 19.6% , indicating efficient .
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ResMed's durability is underscored by consistent profitability over the past 5 years, with no EPS declines.
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ResMed's management has maintained a stable share count with a CAGR of 0.24% over 5 years, indicating disciplined .
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With an yield of 5.62% and an EV/ of 17.1, ResMed's current valuation appears stretched.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
8- 1 of 19.6% is top-quintile in healthcare, indicating strong capital efficiency.
- 2 of 34.3% is double the sector's top-quintile cutoff of 16.2%.
- 3Net margin of 27.4% sits well above the sector top-quintile of 12.8%.
- 4Debt/equity ratio of 0.13 reflects conservative .
Concerns
8- 1 of 19.6 suggests high growth expectations are priced in.
- 2 yield of 5.62% is below the 8-10% 'no-brainer' threshold.
- 3 of 61.7% is below the sector's top-quintile cutoff of 77.9%.
- 4Dividend CAGR of -5.83% indicates declining shareholder returns.
Price history
$250-4.8%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
ResMed Inc. operates in two segments: Sleep and Respiratory Care, and Software as a Service. The company generates revenue through the sale of medical devices and cloud-based software solutions, targeting respiratory disorders. With a TTM revenue of $5.15B and a net margin of 27.4%, the business is highly profitable. The of 34.3% indicates efficient operations, and the 12.6% revenue CAGR over 5 years suggests strong growth potential.
How this analysis has moved
The call has held across 4 reviews.
Oct 11, 2026 → Oct 29, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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