ICU Medical has been treading water for the past six months, recording a small loss of 3.3% while holding steady at $142.98. The stock also fell short of the S&P 500’s 6.3% gain during that period.
Is there a buying opportunity in ICU Medical, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is ICU Medical Not Exciting?
We’re swiping left on ICU Medical for now. Here are three reasons why there are better opportunities than ICUI, plus one stock we’d rather own.
1. Revenue Tumbling Downwards
Long-term growth is the most important, but within healthcare, a stretched historical view may miss new innovations or demand cycles. ICU Medical’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 1.6% over the last two years. 
2. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
ICU Medical’s EPS grew at an unimpressive 2.9% compounded annual growth rate over the last five years, lower than its 11.8% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
3. Previous Growth Initiatives Haven’t Paid Off Yet
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
ICU Medical historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 0.9%, lower than the typical cost of capital (how much it costs to raise money) for healthcare companies.
Final Judgment
ICU Medical isn’t a terrible business, but it doesn’t pass our quality test. With its shares trailing the market in recent months, the stock trades at 16.3× forward P/E (or $142.98 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We’re fairly confident there are better stocks to buy right now. We’d suggest looking at a top digital advertising platform riding the creator economy.
Stocks We Would Buy Instead of ICU Medical
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