On the four Ms, Medline Inc-Cl A earns 27 for management and 64 for moat. The management score rests on a return on invested capital of 5.7% and a gross margin of 26.4% — figures that describe capital earning less than it costs to employ. Debt sits at 1.17x equity. A solid moat alongside weak management is a combination worth understanding before the price matters at all.
Three independent anchors set the price worth paying. Growth is modelled at 7.3% a year, the rate measured from the filings. The exit multiple assumed is 14.6x. That produces an intrinsic value of $6.28, a 10-CAP price of $22.86 and a payback time price of $25.44, with the value zone set at the highest of the three, $25.44. Today's price of $34.94 is 37% above it.
The price is above the value zone and the business scores 64 for moat and 27 for management. Neither test argues for paying up here.
| Price | $34.94 |
| Market cap | $29.5B |
| P/E ratio | 40.6x |
| Return on invested capital | 5.7% |
| Gross margin | 26.4% |
| Debt to equity | 1.17x |
| Free cash flow yield | 3.8% |
| Growth rate used | 7.3% |
| Growth rate measured | 7.0% |
| Exit multiple assumed | 14.6x |
| Company | Moat | Buy price |
| ResMed (RMD) | 91 | $283.19 |
| West Pharmaceutical Services (WST) | 73 | $79.25 |
| Cooper Companies (The) (COO) | 59 | $53.35 |
| Becton Dickinson (BDX) | 39 | $109.27 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Medline Inc-Cl A rather than accepting ours.