u/HotDoor4125

For context, ResMed makes CPAP machines and connected devices for people with sleep apnea and other respiratory conditions. Not exactly a dinner party stock but the business underneath is genuinely interesting.

here's what my screen showed:

ROIC: 20.1% (5yr avg: 18.6%)

FCF margin: 26.1%

Gross margin: 62.2%

Net margin: 27.4%

Revenue CAGR 5yr: 11.7%

P/E: 19.7x

Fair value estimate: ~$225 (using 9% discount rate)

Current price: ~$203

So first thing that stands out is 20% ROIC, that's been consistent for years and not a one year spike. that's a genuinely durable business, not a cycle play.

Then they reported earnings last week. Revenue up 11% year over year, gross margin expanded 290 basis points, and EPS up 21%. Solid across the board and the stock dropped 6.7% due to CFO transition news, however, the business itself is fine. The market sold off a genuinely good quarter because of an executive transition that happens at basically every large company at some point.

The AI narrative is interesting as there's been a lot of fear that GLP-1 drugs like Ozempic will reduce sleep apnea rates as people lose weight and hurt ResMed's addressable market but here's the counterintuitive part: sleep apnea is massively underdiagnosed. Estimates suggest something like 80% of people who have it don't know it. As AI-powered diagnostic tools get better and more accessible, the diagnosed population could actually expand faster than GLP-1 drugs shrink it. ResMed's connected device platform also generates recurring software and data revenue that gets more valuable over time, not less.

idk, i could be wrong on the GLP-1 thing as it's genuinely hard to model but at 19.7x earnings for a business with 20% ROIC, expanding margins, and consistent FCF generation, it feels like the market is pricing in a worst case that may not materialize.

Some concerns I have are the CFO transition is worth monitoring. Brett Sandercock had been there a long time and continuity matters. Also, international revenue growth has been a bit lumpy recently which is worth keeping an eye on.

anyone here follow ResMed closely? curious how you're thinking about the GLP-1 impact and whether the diagnostic expansion thesis holds up.

For context, Cboe Global Markets runs the exchanges where options, futures, and equities get traded. you've probably used their products without realizing it. The VIX index that everyone references when markets get volatile? Yea, that's Cboe.

here's what my screen showed:

ROIC: 58% (5yr average was 14.4%)

FCF margin: 56.8%

Gross margin: 43.4%

Net margin: 25.8%

Revenue CAGR 5yr: 37.8%

P/E: 29.4x

Fair value estimate: ~$322 (using 9% discount rate)

Current price: ~$338

so the business is basically a cash machine. 56.8% FCF margin means for every dollar of revenue, almost 57 cents turns into free cash flow. That's exceptional and not something you see very often.

the ROIC jump from 14.4% to 58% which is staggering. Some of that is almost certainly the 0DTE options explosion driving volumes through their platform without proportional cost increases. Index options average daily volume hit 6.1 million contracts in Q1, up 29% year over year. that's a structural tailwind not just a good quarter.

Oh and btw, they also just reported Q1 earnings last week and crushed it. Revenue up 29% year over year, EPS beat by about 10% and raised full year guidance from mid single digit to low double digit to mid teens growth. Also announced a 20% workforce reduction alongside divesting their Canadian and Australian units to focus on core businesses. stock jumped about 10% on the news.

at ~$338 my model puts it slightly above fair value at current prices, so not screaming cheap but tbh for a business with these FCF margins and ROIC, the premium might be justified depending on how you think about the 0DTE growth runway.

Some concerns I see:

- the S&P index options partnership is a concentration risk worth knowing about. A significant chunk of revenue depends on that relationship continuing. If that dynamic ever shifts it changes the thesis pretty materially.

- also the ROIC at 58% feels almost too good. trying to figure out how much of that is structural moat vs favorable cycle from elevated volatility and options volumes over the past few years. If VIX normalizes lower for a sustained period that could compress volumes and margins.

anyone here follow exchange operators closely? curious how you're thinking about the 0DTE tailwind and whether the volume growth is durable or mean-reverting.

I've been running stocks through a personal fundamental screen looking for businesses where the quality story hasn't fully shown up in the price yet. Uber came up and honestly the turnaround numbers are pretty striking.

Here's what the screen showed:

ROIC: 27.8% (5yr average was -5.1% - this thing was burning cash for years)

Gross margin: 38.5%

Net margin: 19.3%

Revenue CAGR 5yr: 29%

FCF margin: 12.2%

P/E: 16.3x

Fair value estimate (DCF): ~$129

Current price: ~$75

The ROIC flip is the story here. Five years ago Uber was losing money on almost every dollar it reinvested. Today it's generating 28 cents of return on every dollar. That's not a small improvement, that's a fundamentally different business.

And yet the stock is trading at 16x earnings which is honestly pretty undemanding for a company growing revenue at 29% a year with improving margins. My model puts fair value around $129, which is a wide gap from current prices.

A few things worth knowing before Q1 earnings on May 6:

The most recent quarter showed 200 million monthly active users completing over 40 million trips a day. Gross bookings hit $193 billion for full year 2025 and free cash flow came in at $10 billion. These are not struggling business numbers.

The autonomous vehicle angle is also interesting. Uber has been positioning itself as the distribution layer for AV trips rather than a competitor to the AV companies themselves. Partnerships with Waymo and others mean that as self-driving scales, Uber potentially benefits rather than gets disrupted. That's a different narrative than most people have in their heads about this company.

The main concerns I'm sitting with are gross margin at 38.5% which is low compared to pure software but makes more sense in the context of a marketplace business. And the AV angle cuts both ways as the AV companies can decide to build their own consumer apps rather than partner.

Curious if anyone here has been following Uber closely. Is the 16x P/E justified by the AV disruption risk or does the platform moat hold up regardless of who owns the cars?