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Intuitive Surgical Just Makes Sense

Skimming the surface of those phenomenal financial reports makes some growth stories difficult to believe. Learn the story behind the numbers, and it'll all make sense.

Take Intuitive Surgical (Nasdaq: ISRG  ) , for example. The stock price has tripled in just one year, with a breathtaking 2,500% five-year return. Intuitive's long-term excellence is right up there with superstars like Apple (Nasdaq: AAPL  ) or Akamai (Nasdaq: AKAM  ) , and on the same order of magnitude as the very best market performers in the last half-decade -- companies like Hansen Natural (Nasdaq: HANS  ) or Research In Motion (Nasdaq: RIMM  ) . And Intuitive smoked all of them in the past 52 weeks.

Looking forward to the robotic surgery expert's report, I noted that anything short of a blowout quarter would pare back those gains and give us a buy-in plateau today.

No such luck, though -- the company blew past analyst estimates and management guidance the way I blow past editorial deadlines. Fears that gynecological procedures by its robot weren't catching on in the medical community turned out to be unfounded, since hysterectomies were the fastest-growing use case on a sequential percentage basis.

Intuitive Surgical continues to confound the analysts, having beaten every earnings estimate since the fall of 2002. It's an impressive streak in its own right, only made more impressive when CFO Marshall Mohr says that the management team really isn't interested in financial performance.

"The place we feel comfortable comparing -- it really is not in the metrics as much as it is in the patient value." Put the patient first, and the cash will follow naturally.

There is no real competition other than the shaky hands of real surgeons with old-school scalpels. There's a patent moat a mile wide around the core business that makes it hard for even very large, very determined competitors to walk in and steal market share. And once you build up this kind of head start, the likelihood of greater success only improves.

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