Dj Dir Millner Registers 12500 Of Merit Medical Systems Inc >Mmsi

If you're interested in broad exposure to the Healthcare - Broad segment of the equity market, look no further than the Invesco S&P SmallCap Health Care ETF (PSCH), a passively managed exchange traded fund launched on 04/07/2010.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $202.03 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. PSCH seeks to match the performance of the S&P SmallCap 600 Capped Health Care Index before fees and expenses.

The S&P SmallCap 600 Capped Health Care Index measures the overall performance of common stocks in the health care sector.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.29%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.22%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.

Looking at individual holdings, Glaukos Corp (GKOS) accounts for about 4.87% of total assets, followed by Inspire Medical Systems Inc (INSP) and Merit Medical Systems Inc (MMSI).

The top 10 holdings account for about 34.76% of total assets under management.

Performance and Risk

So far this year, PSCH has gained about 14.42%, and is up roughly 39.42% in the last one year (as of 11/12/2024). During this past 52-week period, the fund has traded between $35.36 and $48.87.

The ETF has a beta of 0.93 and standard deviation of 23.46% for the trailing three-year period, making it a high risk choice in the space. With about 71 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P SmallCap Health Care ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PSCH is a good option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $18.11 billion in assets, Health Care Select Sector SPDR ETF has $40.14 billion. VHT has an expense ratio of 0.10% and XLV charges 0.09%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

Have you been paying attention to shares of Merit Medical (MMSI)? Shares have been on the move with the stock up 8.8% over the past month. The stock hit a new 52-week high of $102.88 in the previous session. Merit Medical has gained 34.2% since the start of the year compared to the 4% move for the Zacks Medical sector and the 4.3% return for the Zacks Medical - Dental Supplies industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 30, 2024, Merit Medical reported EPS of $0.86 versus consensus estimate of $0.8 while it beat the consensus revenue estimate by 1.44%.

For the current fiscal year, Merit Medical is expected to post earnings of $3.35 per share on $1.35 billion in revenues. This represents a 11.3% change in EPS on a 7.15% change in revenues. For the next fiscal year, the company is expected to earn $3.71 per share on $1.46 billion in revenues. This represents a year-over-year change of 10.66% and 8.57%, respectively.

Valuation Metrics

Merit Medical may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Merit Medical has a Value Score of C. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 30.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.9X. On a trailing cash flow basis, the stock currently trades at 21.1X versus its peer group's average of 17.1X. Additionally, the stock has a PEG ratio of 2.54. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Merit Medical currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Merit Medical meets the list of requirements. Thus, it seems as though Merit Medical shares could still be poised for more gains ahead.

How Does MMSI Stack Up to the Competition?

Shares of MMSI have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Cardinal Health, Inc. (CAH). CAH has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of C.

Earnings were strong last quarter. Cardinal Health, Inc. beat our consensus estimate by 14.63%, and for the current fiscal year, CAH is expected to post earnings of $7.74 per share on revenue of $217.08 billion.

Shares of Cardinal Health, Inc. have gained 3.9% over the past month, and currently trade at a forward P/E of 15.27X and a P/CF of 11.22X.

The Medical - Dental Supplies industry is in the top 30% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MMSI and CAH, even beyond their own solid fundamental situation.

Zacks Investment Research

Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Becton Dickinson (BDX) or Merit Medical (MMSI). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Becton Dickinson and Merit Medical are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

BDX currently has a forward P/E ratio of 16.78, while MMSI has a forward P/E of 30.58. We also note that BDX has a PEG ratio of 1.80. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MMSI currently has a PEG ratio of 2.55.

Another notable valuation metric for BDX is its P/B ratio of 2.68. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MMSI has a P/B of 4.51.

These metrics, and several others, help BDX earn a Value grade of B, while MMSI has been given a Value grade of C.

Both BDX and MMSI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BDX is the superior value option right now.

Zacks Investment Research

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.

By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.

However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.

Merit Medical (MMSI) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank.

Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Here are three of the most important factors that make the stock of this maker of disposable medical devices a great growth pick right now.

Earnings Growth

Arguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Merit Medical is 21.5%, investors should actually focus on the projected growth. The company's EPS is expected to grow 11.3% this year, crushing the industry average, which calls for EPS growth of 8.1%.

Cash Flow Growth

Cash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.

Right now, year-over-year cash flow growth for Merit Medical is 12.2%, which is higher than many of its peers. In fact, the rate compares to the industry average of -5.2%.

While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 11.5% over the past 3-5 years versus the industry average of 3.5%.

Promising Earnings Estimate Revisions

Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

There have been upward revisions in current-year earnings estimates for Merit Medical. The Zacks Consensus Estimate for the current year has surged 1.6% over the past month.

Bottom Line

While the overall earnings estimate revisions have made Merit Medical a Zacks Rank #2 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination positions Merit Medical well for outperformance, so growth investors may want to bet on it.

Zacks Investment Research