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Intuitive Surgical (ISRG) stock trades at 52.4 times its earnings over the last twelve months, compared with 22.6 for the S&P 500. At that multiple, buyers are paying upfront for years of profit growth that the maker of the da Vinci surgical robot has not yet delivered. So is Intuitive Surgical growing fast enough to back a price like that?

For Now, Intuitive Surgical Grows Faster Than It Must

Partly. At this price, Intuitive Surgical would have to grow revenue about 13.6% a year for five years just to hold its market value as its P/E falls to a mature level. The company is growing faster than that today, with sales up 21.7% from a year…