Sleep treatment business ResMed Inc. (CHESS) (ASX: RMD) jumped more than 7% to hit a record high of $7.91 in morning trade after posting strong results for the quarter ending December 2014. The group delivered a profit of US$91.2 million on revenue of US$423 million, with revenue up 14.2% on a constant currency basis over the prior corresponding period.
These numbers complete a strong first half of financial year 2015 for ResMed largely on the back of new products and growing markets. On a constant currency basis revenue growth was stronger outside the core U.S. market, although gross margins were down slightly mainly due to an unfavourable product mix and decline in average selling price.
Although the rest of world growth was strong, it's probably the return to double-digit growth in the core U.S. market that has most impressed investors. The dual-listed stock fell out of favour with some U.S. institutional equity analysts in early 2014, many of whom will be left to revise their assumptions after the announcement of today's results.
Australian holders of the chess depositary instruments (CDIs) have also been enjoying the U.S. dollar's strength as dividend income is declared in U.S. cents before being translated into the local currency. The declared dividend of U.S. 2.8 cents per CDI will likely take FY15's full-year payout to US 11.2 cents per CDI held.
During the quarter ResMed also continued its share buyback program to repurchase 667,000 shares with a market value around US$33.5 million.
The company has a large pile of cash sitting on its balance sheet and has been actively investing in new e-health projects alongside big electronic consumer goods businesses like Nintendo and Apple.
The business continues to retain a bright outlook, although in my opinion the stock looks fully valued for now.
If you're looking to make big returns in 2015/16 you might want to consider some beaten-down bargains in the energy sector..
