Screen Shot

Source: Intuitive Surgical.

Intuitive Surgical (NASDAQ:ISRG) maker of the da Vinci Robotic Surgical System and market-leader in technology-assisted surgery, is slated to report earnings after the market closes Thursday. For investors who have suffered through a rough 2013 -- with shares trading down almost 20% since the beginning of the year -- here are three key areas to focus on when earnings are reported.

1. The basics
With any company reporting earnings, the quickest way to get a drive-by feel for how the company performed is to compare how revenue and earnings figures stack up against what Wall Street analysts were expecting.

Here's a look at what analysts will be looking for:


Earnings per Share




$526 million

Source: E*Trade.

These are both lower than what the company experienced during the third quarter of 2012. In fact, if Intuitive matches these expectations, it will represent a 4% decrease in earnings and a 2% drop in revenue.

The reason for such slow growth from a company that was growing like gangbusters leads to the second thing to look out for.

2. System sales in North America
Though Intuitive Surgical has a business model that breeds sustainability --through recurring revenue for parts and service on the installed base of da Vinci machines -- in order for the stock to be worth what it is today, it will need to continue convincing hospitals to buy the da Vinci.

During the second quarter of 2012, those sales dropped precipitously.

Screen Shot

Source: SEC filings.

There was lots of speculation on why system sales slowed so much in the United States, ranging from the medical community questioning the efficacy of robotic surgery, to uncertainty surrounding the effects of the Patient Protection and Affordable Care Act.

During the third quarter of 2012, Intuitive sold 114 da Vinci units. Some Wall Street analysts, who have been on the phone with hospital administrators, are confident that the number of unit purchases will pick up once again. If Intuitive is able to show sales of around 114 units, it should be a positive sign for long-term investors that the trend is reversing.

3. Procedure growth
Finally, when it comes to recurring revenue -- which is extremely important for investors who would like to hold the stock for decades -- the amount of operations being performed with the da Vinci is extremely important. Last quarter, procedures grew by 18%, but the company noted weakness in hysterectomies.

With hysterectomies -- along with prostatectomies -- making up the vast majority of procedures performed with the da Vinci, investors should keep their ears open during the conference call to see if hysterectomies are showing continued weakness.

Is it a buy?
Where things stand now, Intuitive is definitely cheaper now than it has been in a while -- trading for just 23 times earnings and 21 times free cash flow. Over the last four years, the company's stock hasn't gotten anywhere near those values.

At the same time, there are serious questions to be resolved. That's why I'm not buying or selling my shares of Intuitive Surgical, which occupy just under 5% of my real-life holdings.

Fool contributor Brian Stoffel owns shares of Intuitive Surgical. The Motley Fool recommends Intuitive Surgical. The Motley Fool owns shares of Intuitive Surgical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.