RMD and ASX Ltd: 2 ASX shares to investigate

The Resmed CDI (ASX:RMD) share price is up 39.9% since the start of 2024. ASX limited liability company (ASX:ASX) share price is 17.1% off its 52-week low.

RMD stock price in focus

ResMed was founded in 1989 by Peter Farrell in Australia, but is currently headquartered in San Diego, California. It is a medical device company that provides cloud-connected continuous positive airway pressure (CPAP) devices for the treatment of obstructive sleep apnea (OSA). Due to its US headquarters, ResMed shares are listed principally on the NYSE, but are also listed on the ASX.

ResMed operates on a global scale, employing over 10,000 people and present in over 140 countries. It has two main business units: sleep and respiratory care and software as a service (SaaS). In sleep and respiratory care, ResMed provides industry-leading CPAP devices for the treatment of sleep apnea. The Respiratory Care Unit includes patients ranging from those who require therapy with CPAP systems only at night to those who support life with non-invasive or invasive ventilation. As part of the SaaS unit, ResMed provides software supporting durable or home medical equipment (DME/HME). Basically, it helps with out-of-hospital care.

With ResMed’s large digital health network powered by cloud-connected devices, ResMed can leverage its industry-leading hardware (e.g., masks and humidifiers) and SaaS data to collect insights, improve outcomes, and reduce overall healthcare costs.

ASX shares

ASX Limited operates Australia’s main national stock exchange. This includes the provision of securities exchange services, derivative exchange services, central counterparty clearing services and financial products related to registration, settlement and delivery-for-payment settlement.

The company provides access to a variety of products including stocks, futures, ETFs, managed funds and real estate investment trusts (REITs).

RMD stock valuation

As a growth company, one way to roughly estimate RMD’s stock price may be to compare its price-to-sales multiple over time. Currently, Resmed CDI stock has a price-to-sales ratio of 5.38x compared to the 5-year average of 8.70x, meaning the company’s stock is trading below its historical average. This could mean a decline in the share price or an increase in sales. In the case of RMD, revenues have been growing for the last 3 years. It’s important to remember that context is important – and this is just one valuation technique. Investment decisions cannot be based solely on one indicator.

The ASX share price is currently trading at a price to sales ratio of 7.55x, compared to its long-term 5-year average of 8.12x. So ASX shares are trading below their historical average. However, this simple multiple should be just the beginning of your research. Rask’s websites offer free online investing courses created by analysts explaining topics such as discounted cash flow (DCF) and dividend discount models (DDM). They even include free quote spreadsheets! Just remember that there are many different ways to value shares, such as ASX Ltd.