1 Place for Intuitive Surgical to Find More Growth

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In today's world, most companies span several regions and sell across the world. As my Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue growth came from abroad. Today, that area makes up half of the S&P 500's growth.

And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.

With that in mind, today we're looking at Intuitive Surgical (NAS: ISRG) . We'll examine not only where its sales and earnings come from, but how its sales abroad have changed over time.


Where Intuitive Surgical's sales were five years ago
Five years ago, Intuitive Surgical produced 83% of its sales within the United States.

anImage

Source: S&P Capital IQ.

Where Intuitive Surgical's sales are today
Today, America is still Intuitive Surgical's largest market, but its influence is shrinking.

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Source: S&P Capital IQ.

Overseas growth can be a challenge in the health care market as regulations stifle the ability of innovative companies to grow at the pace of innovative leaders in the IT space. Yet, Intuitive Surgical has managed to keep its international sales growing above the blistering rates of its domestic sales.

Segment

5-Year Sales Growth

United States

345%

International

503%

Overall, 134 of the 534 da Vinci systems the company sold came overseas last year. That's a dramatic improvement from 2009, when the company's overseas sales total sat at just 86 systems.

Competitor checkup
One last point to check is how Intuitive Surgical's footprint compares with some of its peers':

Company

Geography With Most Sales

Percent of Sales

Intuitive SurgicalUnited States78%
Boston Scientific (NYS: BSX) United States53%
MAKO Surgical (NAS: MAKO) United States100%

Source: S&P Capital IQ. Results for most recently reported fiscal year.

Neither MAKO Surgical nor Boston Scientific are direct competitors to Intuitive Surgical, but they do show two contrasting ends of international exposure within the health care equipment space.

On one hand we have MAKO, a company that many investors see as the next Intuitive Surgical: a small company with a potentially disruptive robotic solution in the health care space. However, unlike Intuitive Surgical, MAKO hasn't managed to expand its solution outside the United States.

Intuitive targeted markets outside the United States while still in its early revenue generating period. Back in 2001, the company had 31% of sales in Europe. However, between 2001 and 2005, Intuitive managed to only double sales in Europe, while U.S. sales swelled more than fivefold. So while Intuitive started out marketing to Europe, subsequently slowed down, and has now been once again growing faster internationally, MAKO's challenge is simply establishing an overseas presence.

On the other hand, we have Boston Scientific, a company not known for its space-age, bleeding-edge solutions like Intuitive and MAKO, but one that has a long history of international sales. The hope for Intuitive investors is that over time, the company can shift its share of international sales -- and the resulting sales growth -- and attain an international sales profile similar to Boston Scientific's.

Keep searching for global opportunities
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At the time this article was published Eric Bleeker owns shares of no companies listed above. The Motley Fool owns shares of MAKO Surgical. Motley Fool newsletter services have recommended buying shares of MAKO Surgical and Intuitive Surgical. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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