NYSE:VAR

Stock Analysis Report

Varian Medical Systems

Executive Summary

Varian Medical Systems, Inc. designs, manufactures, sells, and services medical devices and software products for treating cancer and other medical conditions worldwide.

Rewards

PE ratio (46x) is below the Medical Equipment industry average (46.3x)

Earnings are forecast to grow 21.19% per year

Earnings grew by 95.3% over the past year

Risk Analysis

Highly volatile share price over past 3 months



Snowflake Analysis

Flawless balance sheet with proven track record.


Similar Companies

Share Price & News

How has Varian Medical Systems's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: VAR's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

1.6%

VAR

1.6%

US Medical Equipment

2.0%

US Market


1 Year Return

16.6%

VAR

27.4%

US Medical Equipment

23.5%

US Market

Return vs Industry: VAR underperformed the US Medical Equipment industry which returned 28.4% over the past year.

Return vs Market: VAR underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

VARIndustryMarket
7 Day1.6%1.6%2.0%
30 Day4.9%4.0%4.3%
90 Day30.0%10.4%12.2%
1 Year16.6%16.6%28.4%27.4%26.1%23.5%
3 Year86.7%65.7%94.8%89.2%53.1%43.2%
5 Year92.5%70.8%126.3%102.2%75.5%56.1%

Price Volatility Vs. Market

How volatile is Varian Medical Systems's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Varian Medical Systems undervalued compared to its fair value and its price relative to the market?

46.45x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: VAR ($148.5) is trading above our estimate of fair value ($135.91)

Significantly Below Fair Value: VAR is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: VAR is good value based on its PE Ratio (46x) compared to the Medical Equipment industry average (46.3x).

PE vs Market: VAR is poor value based on its PE Ratio (46.3x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: VAR is poor value based on its PEG Ratio (2.2x)


Price to Book Ratio

PB vs Industry: VAR is overvalued based on its PB Ratio (7.6x) compared to the US Medical Equipment industry average (4.1x).


Next Steps

Future Growth

How is Varian Medical Systems forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

21.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: VAR's forecast earnings growth (21.2% per year) is above the savings rate (1.7%).

Earnings vs Market: VAR's earnings (21.2% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: VAR's revenue (8.8% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: VAR's revenue (8.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: VAR's Return on Equity is forecast to be low in 3 years time (18.3%).


Next Steps

Past Performance

How has Varian Medical Systems performed over the past 5 years?

-11.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: VAR has high quality earnings.

Growing Profit Margin: VAR's current net profit margins (9.1%) are higher than last year (5.1%).


Past Earnings Growth Analysis

Earnings Trend: VAR's earnings have declined by -11.6% per year over the past 5 years.

Accelerating Growth: VAR's earnings growth over the past year (95.3%) exceeds its 5-year average (-11.6% per year).

Earnings vs Industry: VAR earnings growth over the past year (95.3%) exceeded the Medical Equipment industry 31%.


Return on Equity

High ROE: VAR's Return on Equity (16.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Varian Medical Systems's financial position?


Financial Position Analysis

Short Term Liabilities: VAR's short term assets ($2.4B) exceed its short term liabilities ($1.9B).

Long Term Liabilities: VAR's short term assets ($2.4B) exceed its long term liabilities ($440.1M).


Debt to Equity History and Analysis

Debt Level: VAR's debt to equity ratio (23.1%) is considered satisfactory.

Reducing Debt: VAR's debt to equity ratio has reduced from 27.2% to 23.1% over the past 5 years.

Debt Coverage: VAR's debt is well covered by operating cash flow (90.7%).

Interest Coverage: VAR earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: VAR has a high level of physical assets or inventory.

Debt Coverage by Assets: VAR's debt is covered by short term assets (assets are 5.8x debt).


Next Steps

Dividend

What is Varian Medical Systems's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate VAR's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate VAR's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if VAR's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if VAR's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of VAR's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Varian Medical Systems's salary, the management and board of directors tenure and is there insider trading?

1.7yrs

Average management tenure


CEO

Dow Wilson (60yo)

7.3yrs

Tenure

US$9,446,296

Compensation

Mr. Dow R. Wilson has been the Chief Executive Officer and President of Varian Medical Systems, Inc. since September 29, 2012. Mr. Wilson has been a Director of Agilent Technologies, Inc. since March 20, 2 ...


CEO Compensation Analysis

Compensation vs Market: Dow's total compensation ($USD9.45M) is about average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Dow's compensation has been consistent with company performance over the past year.


Management Age and Tenure

1.7yrs

Average Tenure

53.5yo

Average Age

Experienced Management: VAR's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Age and Tenure

4.7yrs

Average Tenure

58.5yo

Average Age

Experienced Board: VAR's board of directors are considered experienced (4.7 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • John Kuo (56yo)

    Senior VP

    • Tenure: 14.5yrs
    • Compensation: US$2.26m
  • Dow Wilson (60yo)

    President

    • Tenure: 7.3yrs
    • Compensation: US$9.45m
  • Kolleen Kennedy (60yo)

    Chief Growth Officer & President of Proton Solutions

    • Compensation: US$3.55m
  • Mike Bruff (50yo)

    Senior VP of Finance & CFO

    • Tenure: 0.08yrs
  • Magnus Momsen

    Senior VP

    • Christopher Toth (40yo)

      President of Varian Oncology Systems

      • Compensation: US$2.22m
    • Gary Bischoping (51yo)

      President of Interventional Oncology Solutions

      • Tenure: 2.7yrs
      • Compensation: US$2.58m
    • Anshul Maheshwari

      VP of Investor Relations & Treasurer

      • Tom Rodden

        Senior VP & Chief Information Officer

        • Tenure: 0.2yrs
      • Kevin O’Reilly

        Senior Vice President of Global Operations

        • Tenure: 0.8yrs

      Board Members

      • Judy Bruner (60yo)

        Independent Director

        • Tenure: 3.4yrs
        • Compensation: US$281.25k
      • Andy Eckert (57yo)

        Independent Chairman

        • Tenure: 5.9yrs
        • Compensation: US$372.00k
      • Tim Guertin (69yo)

        Independent Director

        • Tenure: 15yrs
        • Compensation: US$246.25k
      • Phil Febbo (53yo)

        Independent Director

        • Tenure: 0.4yrs
        • Compensation: US$25.00k
      • Jeff Balser (56yo)

        Independent Director

        • Tenure: 1.3yrs
        • Compensation: US$321.20k
      • Jean-Luc Butel (63yo)

        Independent Director

        • Tenure: 2.8yrs
        • Compensation: US$272.62k
      • Dave Illingworth (65yo)

        Independent Director

        • Tenure: 8.4yrs
        • Compensation: US$257.00k
      • Dow Wilson (60yo)

        President

        • Tenure: 7.3yrs
        • Compensation: US$9.45m
      • Regina Dugan (56yo)

        Independent Director

        • Tenure: 6.1yrs
        • Compensation: US$265.75k
      • Anat Ashkenazi (47yo)

        Independent Director

        • Tenure: 1.1yrs
        • Compensation: US$276.81k

      Company Information

      Varian Medical Systems, Inc.'s company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Varian Medical Systems, Inc.
      • Ticker: VAR
      • Exchange: NYSE
      • Founded: 1948
      • Industry: Health Care Equipment
      • Sector: Healthcare
      • Market Cap: US$13.523b
      • Shares outstanding: 90.91m
      • Website: https://www.varian.com

      Number of Employees


      Location

      • Varian Medical Systems, Inc.
      • 3100 Hansen Way
      • Palo Alto
      • California
      • 94304
      • United States

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      VARNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
      VNMDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
      0LNULSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
      VAR *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968

      Biography

      Varian Medical Systems, Inc. designs, manufactures, sells, and services medical devices and software products for treating cancer and other medical conditions worldwide. It operates in Oncology Systems and Proton Solutions segments. The Oncology Systems segment offers hardware and software products for treating cancer with radiotherapy, fixed field intensity-modulated radiation therapy, image-guided radiation therapy, volumetric modulated arc therapy, stereotactic radiosurgery, stereotactic body radiotherapy, and brachytherapy, as well as quality assurance equipment. Its products include linear accelerators, brachytherapy after loaders, treatment accessories, and quality assurance software; and information management, treatment planning, image processing, clinical knowledge exchange, patient care management, decision-making support, and practice management software. This segment serves university research and community hospitals, private and governmental institutions, healthcare agencies, physicians’ offices, medical oncology practices, radiotherapy centers, and cancer care clinics. The Proton Solutions segment designs, develops, manufactures, sells, and services products and systems for delivering proton therapy for the treatment of cancer. The company has a strategic agreement with Siemens AG; and partnership agreement with Siemens AG. Varian Medical Systems was formerly known as Varian Associates, Inc. and changed its name to Varian Medical Systems, Inc. in April 1999. The company was founded in 1948 and is headquartered in Palo Alto, California. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/17 23:46
      End of Day Share Price2020/01/17 00:00
      Earnings2019/09/27
      Annual Earnings2019/09/27


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.