ResMed Inc. (RMD) Intrinsic Value & DCF Valuation
Medical - Instruments & Supplies · NYSE
Current Price
$225.98
Intrinsic Value
$302.8
+25.4% margin of safety
What Is ResMed Inc.'s Intrinsic Value?
As of 2026-10-07, the base-case DCF model estimates the intrinsic value of ResMed Inc. (RMD) at $302.8 per share, compared with a market price of $225.98, a margin of safety of +25.4%. The base case assumes 8.2% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $229.08 to $388.37. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is ResMed Inc. (RMD) Undervalued?
At $225.98, RMD trades about 25.4% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Strong Brand and Patient Loyalty
ResMed's established brand in sleep apnea devices fosters significant patient trust and loyalty. This makes it difficult for new entrants to displace their installed base.
↑Data Network Effects in Software
ResMed's connected devices generate valuable patient data. This data can be used to improve algorithms and personalize treatment, creating a feedback loop that enhances their offerings.
↑Ecosystem Lock-in with Integrated Solutions
The company offers a comprehensive ecosystem of devices, masks, and software. This integration creates switching costs for healthcare providers and patients invested in their platform.
INVESTMENT RISKS
↓Regulatory Scrutiny and Compliance
The medical device industry faces stringent regulations. Changes in compliance requirements or enforcement could impact ResMed's product development and market access.
↓Supply Chain Vulnerabilities
Reliance on global supply chains for components can expose ResMed to disruptions. Geopolitical events or manufacturing issues could impact production and availability.
↓Reimbursement Rate Fluctuations
Changes in healthcare reimbursement policies by payers can affect the affordability and adoption of ResMed's devices. This could impact sales volumes and profitability.
Base case
RMD base case valuation
Intrinsic Value
$302.8
Margin of safety
+25.4%
Expected annual return
+6.0%
Base case assumptions: 8.2% annual growth, 10.0% discount rate, 11.34x exit multiple, 5 year projection. Data as of 2026-10-07.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the RMD valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for ResMed Inc. respond.
Open DCF Calculator for RMDCompany Overview
ResMed Inc. is a leading global medical technology enterprise engaged in the creation, production, distribution, and marketing of healthcare devices and connected digital solutions. The company operates through two primary segments: Sleep and Respiratory Care, and Software as a Service. Its extensive product range addresses a variety of respiratory disorders, encompassing advanced medical and consumer technologies, ventilation devices, diagnostic equipment, mask systems for both clinical and personal use, headgear, and related accessories, alongside dental devices. ResMed also provides sophisticated cloud-based informatics to enhance patient management and operational efficiency. Notable software offerings in its respiratory portfolio include AirView, for remote device monitoring and setting adjustments; myAir, a personalized application designed to support sleep apnea patients with education and troubleshooting for better engagement and adherence; and U-Sleep, a compliance tracking platform for home medical equipment providers. Complementing these are connectivity modules and Propeller solutions. Furthermore, ResMed offers a robust suite of out-of-hospital software. This includes Brightree, a business management platform for various home care service providers (e.g., HME, pharmacy, infusion, orthotics, prosthetics); MatrixCare, providing care management for senior living, skilled nursing, and hospice organizations; and HEALTHCAREfirst, which supplies electronic health records, billing, coding services, and analytics for home health and hospice agencies. ResMed distributes its offerings primarily to sleep clinics, home healthcare dealers, and hospitals via a global network of distributors and a direct sales force, serving approximately 140 countries. Founded in 1989, the company's headquarters are located in San Diego, California.
Financial Metrics — RMD Stock Valuation Data
Revenue/Share (TTM)
$39.07
FCF/Share (TTM)
$19.97
ROIC (TTM)
19.1%
ROE (TTM)
23.9%
P/FCF
11.3x
EV/EBITDA
14.8x
FCF Yield
8.82%
Debt/Equity
0.13x
On a trailing twelve-month basis, RMD generates free cash flow per share of $19.97 alongside a ROIC of 19.1%, both central inputs for a DCF valuation. Its P/FCF ratio of 11.3x and FCF yield of 8.82% then frame how RMD is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of RMD?
ResMed Inc. currently generates $19.97 in free cash flow per share. At the current price of $225.98, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is RMD undervalued?
RMD trades at a P/FCF ratio of 11.3x with a free cash flow yield of 8.82%. A low P/FCF means investors are paying less per dollar of free cash flow; whether that is cheap depends on the company's growth, cyclicality, and capital intensity. However, whether RMD is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value RMD stock using DCF?
To perform a DCF valuation on ResMed Inc.: (1) Start with the trailing free cash flow per share ($19.97) as the base, (2) project future FCF growth over 5-10 years based on Medical - Instruments & Supplies industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting RMD's risk profile — with a debt-to-equity of 0.13x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to RMD?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For ResMed Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Medical - Instruments & Supplies trends, then discounting those amounts to today's dollars. RMD's ROIC of 19.1% reflects how efficiently the company converts invested capital into profit.
How does WACC affect RMD stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For RMD, with a debt-to-equity ratio of 0.13x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 14.8x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See RMD PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Healthcare valuationsDCF and P/E value RMD with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.