INTUITIVE SURGICAL INC

Where It Passes

Where It Falls Short

• Valuation0% pass✓ 1✗ 27▾

  No clean pass — all 13 investors flag at least one valuation criterion

  Price / 3-yr avg EPS68.9x

  ✗Graham<= 15x

  Price-to-Book Ratio8.8x

  ✗Graham<= 1.5x

  P/E x P/B608.80

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value2.0%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=2.0%, ROC=30.2%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS56.4x

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)52.0x

  ✗Dreman< 8x

  Price / Book Value per Share8.8x

  ✗Dreman< 1.2x✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Valuation ReasonablenessP/E=56.4x

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldP/E=56.4x, FCF Yield=1.6%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=56.4x, P/B=8.8x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-359.2% (IV=$96.60 vs Price=$443.59)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share63.2x

  ✗Ackman<= 25

  Price vs. Trailing Low119% of trailing low ($372.60)

  ✓Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization+1.92%; #2754/6340 (top 43.4%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+0.1040; #4727/6449 (top 73.3%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS56.4x

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share9.03x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+0.0753; #4445/5247 (top 84.7%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+2.34%; #2197/4519 (top 48.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-1.56%; #2895/6202 (top 46.7%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Valuation models0% pass✗ 7▾

  ISRG overvalued: all 7 models price fair value below $443.59 (median $96.60)

  Graham fair value$94.27

  ✗Graham-370.6% margin vs $443.59

  Greenblatt fair value$52.36

  ✗Greenblatt-747.2% margin vs $443.59

  Dreman fair value$96.60

  ✗Dreman-359.2% margin vs $443.59

  Munger fair value$127.77

  ✗Munger-247.2% margin vs $443.59

  Akre fair value$144.56

  ✗Akre-206.9% margin vs $443.59

  Ackman fair value$251.25

  ✗Ackman-76.6% margin vs $443.59

  Templeton fair value$82.89

  ✗Templeton-435.2% margin vs $443.59
• Debt & Leverage8% pass✓ 3✗ 12▾

  11 of 12 flag ISRG's debt & leverage — Graham, Buffett, Lynch +8 more

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest Coverage

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity

  ✗Lynch< 0.33

  Cash - Long-term Debt

  ✗LynchPositive preferred

  LT Debt / Total Assets Change0.00% -> 0.00%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities3.33

  ✓Dreman> 1.5✓SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity

  ✗Dreman< 0.8✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗SchlossD/E < 1.00x

  Debt Levels

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDA

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)

  ✗AsnessTop 30% of eligible cross-section
• Verdicts14% pass✓ 2✗ 12▾

  Split decision: 11 FAIL · 3 NEUTRAL · 1 BUY · 1 PASS

  Overall verdict

  ✗GrahamFAIL (2/9)✗BuffettFAIL (1/9)✗LynchFAIL (3/7)✗GreenblattRank #1387✓PiotroskiBUY (F-Score 8)✗DremanFAIL (4/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (2/5)✓AckmanPASS (5/9)✗TempletonFAIL (3/8)•SleepNEUTRAL (4/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (2/7)•OshaughnessyNEUTRAL (Not ranked)
• Profitability25% pass✓ 16✗ 19▾

  12 of 16 flag ISRG's profitability — Graham, Buffett, Lynch +9 more

  Positive EPS (10 years)24/28 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)22/28 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)14.0%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)29.3% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE18.5%

  ✓Lynch> 15%

  EBIT / Enterprise Value2.0%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=2.0%, ROC=30.2%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets13.96%

  ✓PiotroskiROA > 0

  ROA Change YoY12.39% -> 13.96% (delta: +1.57%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=14.81%, ROA=13.96%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY67.5% -> 66.0%

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue31.3%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity18.5%

  ✓Dreman> 12%

  Margin of SafetyP/E=56.4x, P/B=8.8x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity14.6% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-359.2% (IV=$96.60 vs Price=$443.59)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency22/22 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue28.4%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity18.5%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend24.8% (2023) -> 29.3% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 66.4% -> 66.0%, operating margin 24.8% -> 29.3%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization+1.92%; #2754/6340 (top 43.4%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets+40.21%; #945/3702 (top 25.5%)

  ✓AsnessTop 30% of eligible cross-section

  Net income / positive book equity+18.50%; #883/5226 (top 16.9%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0123; #971/5884 (top 16.5%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years10/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Growth25% pass✓ 5✗ 8▾

  6 of 8 flag ISRG's growth — Graham, Lynch, Dreman +3 more

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: 19.4% vs Rev: 20.5%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency22/22 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth17.2%

  ✓Ackman>= 5%

  Positive EPS Growth Frequency

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 66.4% -> 66.0%, operating margin 24.8% -> 29.3%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR18.2%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Cash Flow50% pass✓ 6✗ 6▾

  5 of 10 pass — Buffett, Dreman, Pabrai +2 more object

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  FCF Positive and Growing$3.6B

  ✓LynchPositive and growing

  Operating Cash Flow$3.0B

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=14.81%, ROA=13.96%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)52.0x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=56.4x, FCF Yield=1.6%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive18/18 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap2.3%

  ✗Ackman>= 4%

  Price / FCF per Share63.2x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency22/22 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$3.6B

  ✓Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization+2.34%; #2197/4519 (top 48.6%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Efficiency50% pass✓ 5✗ 6▾

  4 of 8 pass — Buffett, Munger, Akre +1 more object

  Current Ratio3.33

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)

  ✗Buffett> 10%

  ROIC - WACC

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)30.2%

  ✓Greenblatt> 25%

  Current Ratio Change YoY4.07 -> 4.87

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.45x -> 0.49x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities3.33

  ✓Dreman> 1.5

  Return on Invested Capital

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=unavailable; FY2024: ROIC=unavailable; FY2025: ROIC=unavailable

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)

  ✗SleepROIC > 12% in a majority of years