ISRG, Intuitive Surgical, Inc.
We do so by providing a comprehensive ecosystem that includes robotic-assisted systems, instruments and accessories, customer learning, and customer support services all connected by a digital portfolio that enables actionable insights across the care continuum.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Instruments and accessories (60%), Systems (25%) and Services (16%).
- What moves the needle
- Volume against price, and shelf position. What decides it: whether it can raise prices without losing the customer, and whether the brand still commands its margin.
- Is it a good business?
- Return on capital has run in the teens (median 16%, above 15% in 7 of 10 years). Owner earnings agree: roughly 26% of revenue reaches owners as cash, consistently. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →Instruments and accessories is 60% of revenue, so this is largely a single-line business.
- Instruments and accessories60%$6.0B
- Systems25%$2.5B
- Services16%$1.6B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $2.7B | $3.1B | $3.7B | $4.5B | $4.4B | $5.7B | $6.2B | $7.1B | $8.4B | $10.1B | $10.6B |
| Gross marginGross mgn | 70% | 70% | 70% | 69% | 66% | 69% | 67% | 66% | 67% | 66% | 66% |
| Operating marginOp. mgn | 35.1% | 33.9% | 32.2% | 30.7% | 24.1% | 31.9% | 25.3% | 24.8% | 28.1% | 29.3% | 30.5% |
| Net incomeNet inc. | $738M | $671M | $1.1B | $1.4B | $1.1B | $1.7B | $1.3B | $1.8B | $2.3B | $2.9B | $3.0B |
| EPS (diluted)EPS | $2.08 | $1.91 | $3.15 | $3.85 | $2.94 | $4.66 | $3.65 | $5.03 | $6.42 | $7.87 | $8.28 |
| Owner earningsOwner earn. | $1.0B | $953M | $982M | $1.2B | $1.1B | $1.7B | $958M | $750M | $1.3B | $2.5B | $2.8B |
| ROICROIC | 15% | 16% | 18% | 18% | 11% | 16% | 14% | 16% | 14% | 18% | 17% |
| Cash & investmentsCash+inv | $4.8B | $3.8B | $4.8B | $5.8B | $6.9B | $8.6B | $6.7B | $7.3B | $8.8B | $9.0B | $8.0B |
| Net debt / (cash)Net debt | ($4.8B) | ($3.8B) | ($4.8B) | ($5.8B) | ($6.9B) | ($8.6B) | ($6.7B) | ($7.3B) | ($8.8B) | ($9.0B) | ($8.0B) |
| Book value / shareBVPS | $16.24 | $13.62 | $18.64 | $23.06 | $26.96 | $32.53 | $30.50 | $37.23 | $45.40 | $49.14 | $48.57 |
Owner’s Scorecard
Will it survive?
- No meaningful interest burdenLittle or no interest expense reported
Little or no interest expense reported, the business isn't leaning on lenders to operate.
- Not enough data
The filing data didn't include the inputs for this check.
- Debt, net of cash +$5.9BNet cash, debt-freeCash $3.4B + ST investments $2.6B − debt $0
Cash and short-term investments exceed every dollar of debt by $5.9B, on net the company owes nothing, and can act from strength when others can't. It also holds $3.1B in longer-dated marketable securities; counting those, it sits at net cash of $9.0B. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Capital-hungryDSO 55 + DIO 196 − DPO 27 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- Not enough data
The filing data didn't include the inputs for this check.
- Cash machineOwner Earnings $2.5B = operating cash $3.0B − capex $540M
What an owner could take out without starving the business. That's 25% of revenue. Treating stock comp as the real expense it is (less $788M of SBC) leaves $1.7B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $3.0B ÷ net income $2.9B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns most of itDividends + buybacks $2.3B ÷ Owner Earnings $2.5B
Of $2.5B Owner Earnings, $2.3B (92%) went back to shareholders, $0 dividends, $2.3B buybacks. Net of $788M stock comp, the real buyback was about $1.5B. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? —Not enough data
The filing data didn't include the inputs for this check.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Operating margin 35% (FY2016) → 29% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Owner earnings growth +7%/yr
Free cash to owners grew about 7% a year over the record.
- Worst year 2020 · 24.1% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $17.3B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$4.8B · 28%
- Buybacks$8.0B · 46%
- Retained (debt / cash)$4.5B · 26%
It reinvested $4.8B (28%) back into the business and returned $8.0B (46%) to owners, $0 in dividends, $8.0B in buybacks.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$788M
The slice of the business handed to employees in shares this year, 8% of revenue, equal to 27% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
4 of 5 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $10.1B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity PassCurrent ratio ≥ 2× · 4.87×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +175%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $7.87/share and book value $49.14/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Intuitive Surgical, Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $2.8B on 360M diluted shares; net cash $8.0B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionBusiness
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“Our revenues may be reduced due to pricing pressure if our competitors develop and market products that are more effective or less expensive than our products.”
From the recordOperating margin30.5% now (TTM), off a 35.1% peak (FY2016) - Concentrated dependenceRisk Factors
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Our success in OUS markets also depends on the eligibility of our products for coverage and reimbursement through government-sponsored healthcare payment systems and third-party payors.”
From the recordOwner-earnings margin at stake (TTM)27% - Litigation & contingenciesBusiness
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“Regulatory authorities have broad compliance and enforcement powers and, if such issues cannot be resolved to their satisfaction, can take a variety of actions, including untitled or warning letters, fines, consent decrees, injunctions, or civil or criminal penalties.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“If a recession occurs, economies weaken, or inflationary trends continue, our business and results of operations could be materially adversely affected.”
From the recordWorst year on record24.1% operating margin (FY2020) - Regulation & policyMD&A
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“In 2025, tariffs and other trade measures have increased our cost of revenues by approximately $63.0 million.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “In September 2025, we obtained regulatory clearance in Japan for our Vessel Sealer Curved for use with our da Vinci 5, da Vinci X, and da Vinci Xi surgical systems for grasping and blunt dissection of tissue, as well as bipolar coagulation and mechanical transection of blood vessels (veins and arter…”
- “As a result of the escalation in tariffs and country-specific trade requirements, including export license controls between major economies, we may experience tariff-related inflation in raw materials costs as well as supply shortages based on shipment delays and the availability of alternative sour…”
- “These pass-through tariffs and other specific tariff actions against steel and aluminum, critical minerals, semiconductors, and other products have not had a material direct impact on our operations to date, but the long-term effect of these and other existing and future tariff actions is difficult …”
- “The ultimate impact of changes to tariffs and trade barriers will depend on various factors, including the timing, amount, scope, and nature of any tariffs or trade barriers that are implemented, all of which could have a material adverse effect on our business, financial condition, or results of op…”
- “Foreign Corrupt Practices Act ("FCPA"), UK Bribery Act of 2010 ("UK Bribery Act"), and other local laws prohibiting corrupt payments to government officials; adherence to antitrust and anti-competition laws; and economic weakness, including inflation, or political instability in particular foreign e…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Medical devices
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| BSXBoston Scientific Corp | $20.1B | 69% | 18.0% | 9% | 18% |
| BAXBaxter International Inc | $11.2B | 30% | -2.7% | -2% | 3% |
| ISRGIntuitive Surgical, Inc. | $10.1B | 66% | 29.3% | 18% | 25% |
| ZBHZimmer Biomet Holdings, Inc. | $8.2B | 70% | 13.3% | 5% | 18% |
| EWEdwards Lifesciences Corporation | $6.1B | 78% | 20.8% | 13% | 22% |
| RMDResmed Inc. | $5.1B | 59% | 32.7% | 26% | 32% |
| DXCMDexcom, Inc. | $4.7B | 60% | 19.6% | 38% | 23% |
| PODDInsulet Corporation | $2.7B | 72% | 17.5% | 17% | 14% |