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ResMed Inc. (RMD) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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ResMed Inc. (RMD)

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Intrinsic Value (DCF)

Current$260.70
→
Intrinsic$320.17
+23%
$218.99$320.17$512.30
Market implies 14% growth for 5 years
RMD shows 23% potential upside using 19% growth — reasonable if fundamentals hold.
At $261, the market prices in 14% annual cash flow growth — a moderate expectation aligned with historical trends (19%).
Range: Bear $219 → Bull $512. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →15%17%19%21%
8%$389$421$456$493
10%$274$296$320$345
12%$211$227$245$264
14%$171$184$198$212

Bull Case

  • Bull case ($512) offers 97% upside at 23% growth, 9% discount
  • 19% margin of safety vs. base case estimate
  • Market-implied growth (14%) ≤ historical CAGR (19%)

Bear Case

  • Bear case ($219) implies 16% downside at 15% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$1.98B
Year 2$2.35B
Year 3$2.80B
Year 4$3.33B
Year 5$3.97B
Terminal$58.35B

📐 Model Inputs

Growth Rate19.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.66BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is RMD stock undervalued or overvalued?
🟢 UNDERVALUED

RMD trades at $260.70 vs. our DCF-derived intrinsic value of $320.17, implying +28% upside. At a 10.0% WACC and 19.0% projected FCF growth, the market appears to be underpricing the present value of RMD's future cash flows. The bear case ($212.44) still suggests upside, providing margin of safety.

What is RMD's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.66B, projected at 19.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-358M net debt and dividing by 0.15B shares: Bear $212.44 | Base $320.17 | Bull $477.70. Current price $260.70 implies +28% to base case.

How is RMD's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 19.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($46.82B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 28.2x.