Edwards Lifesciences

Methodology

Edwards Lifesciences' heart valve business generates predictable earnings from procedure-based revenue with strong secular growth from aging populations. The transcatheter aortic valve replacement franchise provides recurring revenue characteristics as procedures grow. Fair value works well when accounting for high-single to low-double-digit earnings growth from TAVR penetration and international expansion.

Methodology

Edwards typically trades at PEG ratios between 2.0-3.5x, reflecting premium valuations for its structural heart leadership and large growth runway in valve replacement procedures. The company's clinical outcomes data and technological leadership create high switching costs. PEG appears expensive but reflects sustainable growth from expanding treatment populations and new valve indications.

Methodology

Edwards doesn't pay dividends and reinvests all cash flow into R&D, clinical trials, and manufacturing capacity to maximize long-term market opportunity. Management focuses on compounding earnings growth through innovation and geographic expansion. Total return depends entirely on continued TAVR adoption and successful development of mitral and tricuspid valve therapies.