3 Reasons Not to Sleep on ResMed Stock

I confess: I've been sleeping on ResMed (NYSE: RMD) stock, not paying much attention to it at all. But maybe I shouldn't ignore it -- and you may not want to, either.

Here are three reasons why it's worth getting to know this company and its stock.

Image source: Getty Images.

First, a little background. ResMed is one of the largest companies in the business of respiratory care devices. More specifically, it makes equipment such as continuous positive airway pressure (CPAP) machines, which help millions of people with conditions such as sleep apnea and chronic obstructive pulmonary disease (COPD) sleep better. The company says it has changed more than 144 million lives in the past 12 months (presumably for the better), and close to 9 million CPAP users have enrolled in its "myAir" sleep-therapy app.

Here are three reasons to consider the stock:

1. ResMed continues to post solid growth

ResMed went public in 1995 and has grown to a recent market value of nearly $38 billion. Its stock has averaged annual gains of 15.6% over the past 15 years, and 16.9% over the past 10. The stock's growth has been slowing, though, averaging annual gains of 6.5% over the past three years.

The medical device company is still growing, though. It posted a year-over-year revenue gain of 11% in its second quarter of fiscal 2026 (which ended Dec. 31, 2025), with gross profit margins rising, and income from operations rising 18%.

In the earnings release, CEO Mick Farrell noted: "These results reflect strong ongoing demand for our market‑leading sleep and respiratory care devices, as well as the growing impact of our digital health ecosystem that spans more than 140 countries. As we move into the second half of fiscal year 2026, we will continue to invest in innovation to scale our digital health capabilities and expand global access to life-saving care, while delivering sustainable, profitable growth."

Most of the market is owned by either ResMed or Koninklijke Philips, with ResMed the leader in many regions.

2. ResMed is investing to further its growth

By buying and developing various digital technologies, ResMed has been able to boost its growth, as many customers using its app end up more motivated to use its devices.

On the company's latest conference call, Farrell said: "Our R&D [research and development] investments in the next generation of market-leading masks, cloud-connected medical devices, and digital healthcare software position us to keep delivering the world's smallest, quietest, most comfortable, most connected, most intelligent therapy solutions for sleep apnea and expansions into insomnia, respiratory insufficiency, and beyond."

3. Right now, ResMed's stock is trading cheaply

Finally, ResMed's stock is appealingly valued at recent levels, with a recent forward-looking price-to-earnings (P/E) ratio of 22, well below its five-year average of 29. (Its price-to-sales ratio of 7 is a bit below its five-year average of 7.8, though both of those latter numbers are on the steep side.)

Other things to keep in mind about ResMed

ResMed isn't a no-brainer buy. You'll need to research it further to see what you think, and if you buy, keep an eye on it over time, to make sure it's still growing. There are some potential headwinds, such as uncertain future reimbursement rates from Medicare, and the potential successful emergence of alternative treatments.

Remember, too, that there are plenty of other exciting growth stocks out there.

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ResMed. The Motley Fool has a disclosure policy.