Ramsay Health Care - RHC

[Sideshow Bob]

Number alone, no. But What are their growth prospects? Think they are still expanding and acquisition mode? But would need to deliver to justify SP.

[percy]

Number alone, no. But What are their growth prospects? Think they are still expanding and acquisition mode? But would need to deliver to justify SP.

Projected growth EPS.2013 actual 16.7% 2014 forecast 16.7% 2015 forecast 14.7% 2016 forecast 15%
PE 26.5...22.7....19.8....17.2....

[born2invest]

Projected growth EPS.2013 actual 16.7% 2014 forecast 16.7% 2015 forecast 14.7% 2016 forecast 15%
PE 26.5...22.7....19.8....17.2....

I understand when the EPS increases like you mention, the theoretical PE decreased from 26.5 to 17.2.

But why do you think like this? Any company that is growing it's EPS, the P/E ratio will decrease in the example you have given above. Do you use this sort of formula to find out a valuation for buying? Sort of like the PEG ratio?

I'm quite interested in why you have put the info this way.

[percy]

I understand when the EPS increases like you mention, the theoretical PE decreased from 26.5 to 17.2.

But why do you think like this? Any company that is growing it's EPS, the P/E ratio will decrease in the example you have given above. Do you use this sort of formula to find out a valuation for buying? Sort of like the PEG ratio?

I'm quite interested in why you have put the info this way.

I think you can see where I am headed.I try to use PEG but prefer to use PEG plus dividend.I do not mind a high PE so long as the growth rate and the dividend yield add up to more.I am also very scared to take too much notice of 2 or more years' out projections.
RHC PE is 30.35.and dividend yield is 1.86%.So using either formula it does not add up.ie projected growth is 16.7%.
What I did not state was it was suggested we sell TEL nz to fund RHC purchase.
TEL's PE is 17.69 and dividend yield is 7.03%.What I have no idea is TEL's projected growth rate.

[born2invest]

ns

I think you can see where I am headed.I try to use PEG but prefer to use PEG plus dividend.I do not mind a high PE so long as the growth rate and the dividend yield add up to more.I am also very scared to take too much notice of 2 or more years' out projections.
RHC PE is 30.35.and dividend yield is 1.86%.So using either formula it does not add up.ie projected growth is 16.7%.
What I did not state was it was suggested we sell TEL nz to fund RHC purchase.
TEL's PE is 17.69 and dividend yield is 7.03%.What I have no idea is TEL's projected growth rate.

So if the growth rate + dividend is more than P/E ratio you buy?

[born2invest]

ns

I think you can see where I am headed.I try to use PEG but prefer to use PEG plus dividend.I do not mind a high PE so long as the growth rate and the dividend yield add up to more.I am also very scared to take too much notice of 2 or more years' out projections.
RHC PE is 30.35.and dividend yield is 1.86%.So using either formula it does not add up.ie projected growth is 16.7%.
What I did not state was it was suggested we sell TEL nz to fund RHC purchase.
TEL's PE is 17.69 and dividend yield is 7.03%.What I have no idea is TEL's projected growth rate.

So if the growth rate + dividend is more than P/E ratio you buy?

[percy]

ns

So if the growth rate + dividend is more than P/E ratio you buy?

Yes.
Often it works out a lot more.
From memory I added to my MNF at 28cents.Projected PE was about 9,while growth was over 20%. This was laid out in a company presentation.
Unfortunately that does not happen too often.But if you start thinking that way it works out to be profitable.Gives you a large margin of safety.To be really safe you don't want to take future projections more than 2 years,although 1 year's is even safer.