LMAT

LeMaitre is a genuinely excellent small-cap medical-device business. FY2025 revenue grew 13.5% to $250M, the fifth straight year of acceleration ($154M→$162M→$193M→$220M→$250M), while net income jumped 31.1% to $57.7M and diluted EPS rose 30.6% to $2.52. Margins are pristine and still expanding: 71.5% gross, 27.2% operating, 23.1% net. The balance sheet is fortress-like — $394M equity against $222M liabilities (0.56x), $468M of current assets versus just $36.3M current liabilities, and operating cash flow surged 84% to $81.3M against only $6.8M of capex. This is a niche vascular franchise (XenoSure, Artegraft, Pruitt, RestoreFlow biologic tissue) compounding earnings at 30% with light reinvestment needs and a growing dividend (+25.9% to $18.1M). On quality alone it earns a place in a portfolio.

The catch is price. At $96 the stock trades at 38.1x trailing EPS and 8.8x sales — a premium that already capitalizes the strong growth. Earnings growing ~30% make the multiple defensible (PEG near 1.3), but that 30% net-income growth outpaced 13.5% revenue growth, meaning a meaningful slice came from margin expansion and tax/operating leverage that cannot repeat indefinitely; normalize income growth toward the mid-teens revenue line and the multiple looks full. ROE is a modest 14.7% precisely because the company sits on a large, low-returning cash-and-marketable-securities pile ($641M of securities churned through investing activities), so headline returns understate operating-business quality but also flag that excess capital isn't yet driving incremental returns.