RYM - Ryman Healthcare

[born2invest]

Sorry, but this answer just sounds like someone feeling a bit down about not capitalising on the returns RYM has offered over the years... If not Feel free to correct me It's just that you don't provide any numbers to back up your opinion. How are you valuing RYM? Care to share your numbers??

I bought in at $2.05 a few years ago. I sold them a few months ago around $6.90 so I haven't missed out. In fact, I more than tripled my investment in 3 years.

[born2invest]

I find it funny that as soon as someone says the market darling RYM is overvalued, you all get defensive and aggresive and attack the person who is looking at the situation rationally. It seems to me that a lot of you are letting your emotions and heard behaviour rule your investment decisions.

[CJ]

I forecast EPS growth over the 7 years of 10.5% per year

Why have you choosen this amount. I thought their growth was ~20% per annum historically.

[Beagle]

Thier cash flow is actually growing at ~30% per annum. Anyone can construct any valuation they like using disingenious numbers that simply don't reflect reality. Morningstar are good at that too

The blue sky thread is over @ XRO.
Simply calling it as I see it, no offence intended.

[winner69]

Thier cash flow is actually growing at ~30% per annum. Anyone can construct any valuation they like using disingenious numbers that simply don't reflect reality. Morningstar are good at that too

The blue sky thread is over @ XRO.
Simply calling it as I see it, no offence intended.

Jeez roger .....cash flows growing faster than DIL ......you can't be right!!!!!

[Vaygor1]

Why have you choosen this amount. I thought their growth was ~20% per annum historically.

I agree with Roger. Born2Invests numbers are off the mark. Why select 10.4% growth? In reality it is (and has been for a long time) 17% growth per annum, and this in a company whose growth is truly about the most predicable on the planet. Also to value RYM at less than what MorningDump does beggars belief.

$100 after 7 years compounding at 10.4% = $200
$100 after 7 years compounding at 17.0% = $300

So Born needs to add 50% to his/her figures. $4.37 x 1.5 = $6.55. If RYM drops down to $6.55 (let alone $4.37) in the foreseeable future I will eat the laptop on which I type.

[born2invest]

Why have you choosen this amount. I thought their growth was ~20% per annum historically.

Growth in EPS over the past few years has averaged around 14%

I've therefore factored in another 2 years at growth of 14.5% and then down to 9% for the following 5 years.

Will it grow like this? Who knows? It's my best guess and that's really all forecasts are. I don't claim to know the future, certainly not 7 years into the future, but it is a best guess which allows me to work out some sort of valuation.

[born2invest]

I agree with Roger. Born2Invests numbers are off the mark. Why select 10.4% growth? In reality it is (and has been for a long time) 17% growth per annum, and this in a company whose growth is truly about the most predicable on the planet. Also to value RYM at less than what MorningDump does beggars belief.

$100 after 7 years compounding at 10.4% = $200
$100 after 7 years compounding at 17.0% = $300

So Born needs to add 50% to his/her figures. $4.37 x 1.5 = $6.55. If RYM drops down to $6.55 (let alone $4.37) in the foreseeable future I will eat the laptop on which I type.

Ok so your method of valuation is different to mine.

All that proves is that I'm only willing to buy the company at a lower price than you.

The fact that you say their "growth is the most predictable on the planet" is concerning.

[born2invest]

Thier cash flow is actually growing at ~30% per annum.

Operational cashflow has grown roughly 30% over the last 3 years, yes this is correct. If you look over:

4 years is 17%
5 years is 20%
6 years is 15%

However, I'm more concerned about free cashflow. This has only averaged 14 million per year for the last 9 years, most recently 6 million. I'm aware that they have large CAPEX on new buildings, upgrades, etc but free cashflow is the final figure.

I will admit that my valuation figures and the growth I predict may be conservative. All I know is that I ran the same valuation method back in 2010 and RYM was a buy. Now it is not. My method uncovered it was undervalued back then but not now. It stops me from buying anything that looks likely not to make me 15% p/a after tax.

[Vaygor1]

The fact that you say their "growth is the most predictable on the planet" is concerning.

Really? You should read their annual reports.

RYM Annual report 2012:
A Decade of Record Results.
The result is a significant milestone, as it marks ten years in succession of record profit results for the company.
This is no mean feat, as many companies talk about double digit growth but only a tiny percentage of large companies reliably grow their bottom line year after year. In fact, a recent report in the Harvard Business Review highlighted that only 5 out of 2,350 large companies surveyed from around the world grew both their revenues and profits by 5% or more every year over the last 10 years.

... and RYM outstripped 5%

You misquote me. I stated "...whose growth is truly about the most predictable on the planet."