Shares of InMode Ltd. (NASDAQ:INMD), a leading provider of medical technologies, soared by 5.59% in pre-market trading on November 6, 2024. This surge came after a thorough analysis of the company's financial performance revealed that InMode's earnings may be stronger than they appear on the surface.
The analysis, conducted by financial experts, focused on InMode's accrual ratio, a key metric used to assess a company's ability to convert reported profits into free cash flow (FCF). With an accrual ratio of -0.15 for the year to September 2024, InMode demonstrated an impressive cash conversion rate. Notably, the company's free cash flow of $161 million in the last year significantly exceeded its statutory profit of $153.7 million.
This positive cash flow situation suggests that InMode's earnings potential may be better than initially perceived by the market. Investors reacted favorably to the analysis, driving the stock's pre-market surge as they reevaluated the company's financial strength and future prospects.
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