RYM - Ryman Healthcare

[muss1]

P/E of 20ish for a 15% p.a. growth spunds good, but in this environment of risk on and bullishness, lord knows!

Exactly.. There's no margin of safety that's for sure

[born2invest]

Exactly.. There's no margin of safety that's for sure

So if we all agree a P/E of 20 is about right, then we want a margin of safety of say 20% so we are buying RYM at a P/E of 16?

It is now a P/E of 27.

So I don't understand why you are against my argument because you have just told me 20 is about right and therefore RYM at a P/E of 27 is 35% over valued?

Yes?

[muss1]

I don't think we are getting a margin of safety with such a darling stock, so maybe we are buying at p/e of 20. I doubt we are even going to get that in the current market. Unless of course it finds some resistance and cools down when this rally is over. We could be waiting a while to buy/top up if we aren't prepared to go above p/e of 20. I personally think your valuation is overly conservative even before you add a margin of safety

[winner69]

jeez born2invest you have pissed off the masses - like a personal insult to each of them individually

Good on you for having a method to assessing what is value - as you have found out value does come to those who wait.

Keeping your assumptions about dividend payout ratio and the ongoing PE this table shows the price you would be buying to achieve your 15% pa return at differenbt growth rates

Spooky that the analyst gurus out there have a value of about 750 ..... about the 20% pa growth rate. Maybe these geniuses that the followers love just do simple DDM models but write pages and pages to convince the punters thet are indeed clever

Or maybe the market is very efficient and know RYM growth rate is going to be 20% pa and priced it accordingly

But don't be swayed mate .... take what these guys have said and think about it - might change your assumptions .... but if they have not convinced you and you believe that your reducing growth rates from a few years out is valid stick with it ... after all your cash at stake and you know what you want in the way of returns eh

[born2invest]

jeez born2invest you have pissed off the masses - like a personal insult to each of them individually

Herd Instinct-

A mentality characterized by a lack of individual decision-making or thoughtfulness, causing people to think and act in the same way as the majority of those around them. In finance, a herd instinct would relate to instances in which individuals gravitate to the same or similar investments, based almost solely on the fact that many others are investing in those stocks. The fear of regret of missing out on a good investment is often a driving force behind herd instinct.

There are a couple of reasons why herd behavior happens. The first is the social pressure of conformity. You probably know from experience that this can be a powerful force. This is because most people are very sociable and have a natural desire to be accepted by a group, rather than be branded as an outcast. Therefore, following the group is an ideal way of becoming a member.

The second reason is the common rationale that it's unlikely that such a large group could be wrong. After all, even if you are convinced that a particular idea or course or action is irrational or incorrect, you might still follow the herd, believing they know something that you don't. This is especially prevalent in situations in which an individual has very little experience

[macduffy]

I love it!

Freud said something very similar to me at our last session!

[Beagle]

So if we all agree a P/E of 20 is about right, then we want a margin of safety of say 20% so we are buying RYM at a P/E of 16?

It is now a P/E of 27.

So I don't understand why you are against my argument because you have just told me 20 is about right and therefore RYM at a P/E of 27 is 35% over valued?

Yes?

I don't agree a PE of 20 is about right and believe the current late 20's PE of Ryman is justified, (unlike the late 20's PE rating of many other companies on the N.Z. market), based on Ryman's proven business model, their proven growth record in good times and bad, (how many other companies do you know that have consistently grown their profits both in the years before the global financial crisis and during it ), that's right, Ryman's track record is truly exceptional !! Its N.Z. premier growth stock and unlike the real bubble that readily springs to mind, (Xero) actually grown profits, not grows losses !!

Summerset are on a PE of just over 30 without the many years of proven performance of Ryman.

Referencing back Ryman's PE to Meridian was my tongue in cheek way of suggesting people should think about which of these two companies is incorrectly priced. Its not hard to figure that one out !!
Disclosure - own Ryman, Summerset and definitly didn't get duped with slick marketing into the Gov't energy pup's.

[Beagle]

Herd Instinct-

A mentality characterized by a lack of individual decision-making or thoughtfulness, causing people to think and act in the same way as the majority of those around them. In finance, a herd instinct would relate to instances in which individuals gravitate to the same or similar investments, based almost solely on the fact that many others are investing in those stocks. The fear of regret of missing out on a good investment is often a driving force behind herd instinct.

There are a couple of reasons why herd behavior happens. The first is the social pressure of conformity. You probably know from experience that this can be a powerful force. This is because most people are very sociable and have a natural desire to be accepted by a group, rather than be branded as an outcast. Therefore, following the group is an ideal way of becoming a member.

The second reason is the common rationale that it's unlikely that such a large group could be wrong. After all, even if you are convinced that a particular idea or course or action is irrational or incorrect, you might still follow the herd, believing they know something that you don't. This is especially prevalent in situations in which an individual has very little experience

Great post but honestly mate your talents are truly wasted in this thread. Head on over to the Xero thread you might save some people really losing their shirt !! All that's driving that stock is what you've suggested, momentum, slick marketing and large doses of ultra ambitions plans AKA Corporate B.S.

[born2invest]

Great post but honestly mate your talents are truly wasted in this thread. Head on over to the Xero thread you might save some people really losing their shirt !! All that's driving that stock is what you've suggested, momentum, slick marketing and large doses of ultra ambitions plans AKA Corporate B.S.

The Xero thread!

No way!!

[Vaygor1]

Hi Vaygor1,

What do you think Ryman Healthcare is worth?

What is your required return per year?

What is a reasonable expected growth rate for the next 7 years?

Do you think growing 17% per year is sustainable longer term? (This would mean a 10.44 billion market cap in 7 years if the same P/E ratio applies)

In response to your 4 questions:

There are plenty of my previous posts on this thread that will tell you that. Recent RYM shareprice movement strongly suggests I am overly conservative.

Probably less than yours as it appears you wish to buy a lot lower than me. However your same rationale in buying also causes you to sell too early imho. I look for after tax return per annum, absolute minimum of 20% which I have achieved every year for the last 16 years.

17% to 19% on average.

Yes I do. I haven't checked your figures but assuming your maths is okay and given RYM's performance so far since listing, the data on future retirement figures for the next 20 years, the tangibility of RYM's assets, and long term property price growth, I don't see why a market cap of NZ$10 Billion in 7 years is not achievable.