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
Where Intuitive Surgical's sales were five years ago
Five years ago, Intuitive Surgical produced 83% of its sales within the United States.
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.
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 Surgical | United States | 78% |
|
Boston Scientific |
United States | 53% |
|
MAKO Surgical |
United States | 100% |
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.
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