Stock Analysis

Is Now The Time To Put Edwards Lifesciences (NYSE:EW) On Your Watchlist?

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Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In contrast to all that, I prefer to spend time on companies like Edwards Lifesciences (NYSE:EW), which has not only revenues, but also profits. Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

See our latest analysis for Edwards Lifesciences

Edwards Lifesciences's Earnings Per Share Are Growing.

As one of my mentors once told me, share price follows earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. It certainly is nice to see that Edwards Lifesciences has managed to grow EPS by 27% per year over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Edwards Lifesciences's EBIT margins were flat over the last year, revenue grew by a solid 20% to US$5.4b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

NYSE:EW Earnings and Revenue History May 10th 2022

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future Edwards Lifesciences EPS 100% free.

Are Edwards Lifesciences Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

It's worth noting that there was some insider selling of Edwards Lifesciences shares last year, worth -US$52k. But that is far less than the large US$168k share acquisition by Independent Director Nicholas Valeriani.

Along with the insider buying, another encouraging sign for Edwards Lifesciences is that insiders, as a group, have a considerable shareholding. Indeed, they have a glittering mountain of wealth invested in it, currently valued at US$512m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!

Is Edwards Lifesciences Worth Keeping An Eye On?

You can't deny that Edwards Lifesciences has grown its earnings per share at a very impressive rate. That's attractive. The cranberry sauce on the turkey is that insiders own a bunch of shares, and one has been buying more. So it's fair to say I think this stock may well deserve a spot on your watchlist. Still, you should learn about the 2 warning signs we've spotted with Edwards Lifesciences .

The good news is that Edwards Lifesciences is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

What are the risks and opportunities for Edwards Lifesciences?

Edwards Lifesciences Corporation provides products and technologies for structural heart disease, and critical care and surgical monitoring in the United States, Europe, Japan, and internationally.

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  • Price-To-Earnings ratio (34.7x) is below the Medical Equipment industry average (36.4x)

  • Earnings are forecast to grow 12.47% per year


No risks detected for EW from our risks checks.

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