Robotic surgery may sound like science fiction, but Intuitive Surgical (NASDAQ:ISRG) is doing it today. This Rule Breakers pick reports earnings tonight, so it's time for a quarterly checkup. The stock went on a fire sale after beating expectations last time around, and it never really climbed back up. So what's next?

What Fools say:
Here's how Intuitive Surgical's CAPS rating stacks up against some of its peers and competitors:

Company

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

Medtronic (NYSE:MDT)

$60.0

27.3

****

Hitachi (NYSE:HIT)

$24.2

N/A

**

Intuitive Surgical

$11.0

67.7

****

Hologic (NASDAQ:HOLX)

$6.1

N/A

*****

Accuray Incorporated (NASDAQ:ARAY)

$0.4

80.0

****

Data taken from Motley Fool CAPS on 07/21/2008.

Yeah, those peers fall loosely into the "medical devices" category, rather than head-on competition. Thanks to a rock-solid patent portfolio and a years-long head start, Intuitive simply doesn't have any real rivals.

CAPS all-star RonChapmanJr loves Intuitive's international growth plans with "distributors in Australia, Canada, China, the Czech Republic, India, Italy, Japan, Korea, Romania, Saudi Arabia, Singapore, Spain, Taiwan, Turkey and the United Kingdom."

However, even Ron concedes that the P/E ratio is very rich -- a common complaint among the bears on this stock.

What management does:
All the margins are opening up wider and wider, as the installed base of da Vinci robots grows. Those machines need a steady stream of disposable supplies -- which Intuitive is happy to sell with fat profit margins.

Margins

12/06

3/07

6/07

9/07

12/07

3/08

Gross

66.5%

66.6%

66.5%

67.6%

69.0%

69.3%

Operating

28.8%

29.3%

30.6%

32.4%

34.7%

35.5%

Net

19.3%

19.9%

20.6%

22.7%

24.1%

24.5%

FCF/Revenue

22.5%

24.8%

26.9%

25.7%

30.9%

27.7%

And there's nothing wrong with the growth trends, either.

Growth (YOY)

12/06

3/07

6/07

9/07

12/07

3/08

Revenue

63.9%

55.8%

55.7%

57.7%

61.2%

64.7%

Earnings

(23.5%)

(18.2%)

(5.9%)

21.5%

100.6%

103.4%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Robotic surgery is less invasive, and it gives the controlling surgeon greater precision and stability than any handheld scalpel could. Patients can recover faster and with less risk of complications. Patients walk away happier and healthier, beds will clear out quicker, and hospitals should see fewer malpractice lawsuits (spurious or not). Taken together, it's no wonder these machines have been selling so briskly.

When JPMorgan Chase (NYSE:JPM) bought out Bear Stearns, Intuitive filled Bear's spot in the S&P 500 index -- an indication of the company's growing stature and maturity. Yes, the stock is pricey by traditional valuation methods, but factor in the growth opportunities, and the PEG ratio becomes a quite reasonable 1.53.

If Intuitive disappoints again (well, relatively speaking), my shares will get cheaper for a while, but you'll have an even fatter value pitch to swing at than you see right now. If not, the stock may never be this cheap again.

JPMorgan Chase is a Motley Fool Income Investor pick. Intuitive Surgical is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days. Or just sign up for a free CAPS account to hear more from the fellow Fools quoted above -- or share your own thoughts!

Fool contributor Anders Bylund is a longtime investor in Intuitive Surgical but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.