RYM - Ryman Healthcare

[Beagle]

RYM up 90% in the last 5 years (below their benchmark of doubling every 5 years) Note 15% compound earnings growth = double your earnings every 5 years.
I have found buying RYM shares on a forward PE of 23.5 or less underlying earnings as being the most rewarding times to buy and hold the company.
RYM currently trades at 28 times FY19 my estimated FY19 underlying earnings. I like the company but there is no way in the world I will pay 28 times FY19 underlying earnings most especially with this government running us the potential risk of major left field tax reform.

Good luck to holders.

[forest]

RYM up 90% in the last 5 years (below their benchmark of doubling every 5 years) Note 15% compound earnings growth = double your earnings every 5 years.
I have found buying RYM shares on a forward PE of 23.5 or less underlying earnings as being the most rewarding times to buy and hold the company.
RYM currently trades at 28 times FY19 my estimated FY19 underlying earnings. I like the company but there is no way in the world I will pay 28 times FY19 underlying earnings most especially with this government running us the potential risk of major left field tax reform.

Good luck to holders.

Beagle RYM might look expensive compared to SUM if one looks at the annual reports and analyse the 2 companies the standard bean counter way.
However I perceive SUM as having a number of risk which effect RYM less or not at all.

A few examples, RYM grows approximately 15% per year. Any faster grow and the company increases the risk of growing pains.

I believe RYM pays their caregivers and nursers more than other outfits in this industry, also RYM has a higher ratio of caregivers to residents/patients than other in the retirement sector. The higher pay and more caregivers means that if government regulations increases requirements on minimum wages and or care givers ratios to residents/patients, RYM wont be effected as much SUM others.

RYM charges a max of 20% deferred management fee, others range between 24% and 30%. Therefore RYM got more room to increase this fee than all others.

There are more hidden gem in this company, to find them I would suggest you attend an investors information event or AGM.

I agree with you that SUM is a good company, however RYM in my mind is in a league above anything else in the industry.

[couta1]

Beagle RYM might look expensive compared to SUM if one looks at the annual reports and analyse the 2 companies the standard bean counter way.
However I perceive SUM as having a number of risk which effect RYM less or not at all.

A few examples, RYM grows approximately 15% per year. Any faster grow and the company increases the risk of growing pains.

I believe RYM pays their caregivers and nursers more than other outfits in this industry, also RYM has a higher ratio of caregivers to residence/patience than other in the retirement sector. The higher pay and more caregivers means that if government regulations increases requirements on minimum wages and or care givers ratios to residence/patience, RYM wont be effected as much SUM others.

RYM charges a max of 20% deferred management fee, others range between 24% and 30%. Therefor RYM got more room to increase this fee than all others.

There are more hidden gem in this company, to find them I would suggest you attend an investors information event or AGM.

I agree with you that SUM is a good company, however RYM in my mind is in a league above anything else in the industry.

Most of your post is spot on especially the last sentence. Regarding caregiver to resident ratios, all the companies are basically the same,however when it comes to activities staff RYM provides more staff to residents than both SUM and OCA, in fact RYM provide more overall for their residents than any other provider.

[Beagle]

I respect you guys point of view and have no argument about the standard of facilities / services that RYM provides and accept it is the "gold standard" in the industry.
Further, I think their 20% retention rate is the fairest to residents in the industry and they may well pay a little more than other industry participants BUT from a SHAREHOLDER point of view and that's what this site is all about their growth numbers in recent years have disappointed and these fairness's and niceties' to residents come from somewhere and you guessed it, its shareholders.

I have done nicely out of RYM over the years I've owned them and as mentioned the best periods have been where their forward PE is under 23.5, presently 28 !

My point is that RYM presently trades towards the top end of its historical PE range, whereas SUM presently trades towards the bottom end of its historical range. They both face similar risks and have similar opportunities. I think on a risk reward basis on the balance of probabilities SUM is a considerably better buy than RYM at present but each to their own.

The plain undisputed fact of the matter is SUM have enjoyed a compound annual average growth rate in their underlying earnings of 45% per annum, nearly three times RYM over the six years SUM has been listed. Nobody can dispute this, it is a matter of clear historical fact. You must expect that accountants will want to deal in facts and numbers not subjective feel good matters. Any accountant worth his salt is going to take notice of the vastly superior growth rate in SUM. Others invest on the basis of whatever they feel is appropriate, (RYM facilities are nicer, their pay rates are better, their exercise programs are better or whatever else they deem as an appropriate measure) I invest based on factual numbers, growth and estimated outlook and try and leave sentiment and feel good factors out of it as much as possible.

I would reiterate there is a genuine risk of some radical left field change in tax policy affecting the entire sector. Nobody can reliably predict what this tax committee looking at potential widespread reform of the taxation system might do. If people want to invest in RYM at the current price and 28 forward PE with this potential overhanging risk, which I would argue is in no way priced into RYM shares, fill your boots and good luck. Personally I would want to see a PE discount of 2-3 below my normal buy price of 23.5 times to be really interested in RYM shares at present to account for this risk.

[winner69]

Yes Beagle - you are reminding us that when PEs are above average future returns are generally below average (Investing 204 I think) Applies to individual stocks as well as markets ..... and RYM historically has been no exception


From my database since 2002 Ryman's average PE has been just over 20. From 2002 to 2013 the average was 17 - about where SUM is now....hmmm

RYM PE was 10 in March 2003 and subsequent 3 year return was 64% pa .....other side of the coin was the PE of 37 in 2014 and subsequent 3 year return was -1% (as monitored on this thread eh)

[Valuegrowth]

When investing sometimes boring is beautiful. Boring stocks will have more demand during bear market. Boring stocks also tend to offer above-average dividend yields. These boring stocks are often forgotten when investors or traders see stocks like Facebook or Amazon. They also tend to be less volatile during corrections and bear markets thanks to their steady business models and predictable cash flow. They can take as examples of buy and forget type of investments. However buying price is important. Can we expect correction after current rally and possibly hitting new 52 week high or all time high?

[Patient Panda]

Beauty of a quote from p88 of the 2018 annual report

“Our growth will be supported by the ageing population, ongoing development, and the maturing of our villages. Each new village takes about 6 or 7 years to mature after the initial influx of capital from the first sales. That’s the point where the village matures in its earnings potential and becomes business as usual.

We’ve built 12 large villages since 2011, so we have a lot of potential earnings due to come
on stream as those villages mature. When you consider that we have another 16 villages in the pipeline, that’s a lot of potential future earnings yet to be realised.”

[Beagle]

Yes Beagle - you are reminding us that when PEs are above average future returns are generally below average (Investing 204 I think) Applies to individual stocks as well as markets ..... and RYM historically has been no exception


From my database since 2002 Ryman's average PE has been just over 20. From 2002 to 2013 the average was 17 - about where SUM is now....hmmm

RYM PE was 10 in March 2003 and subsequent 3 year return was 64% pa .....other side of the coin was the PE of 37 in 2014 and subsequent 3 year return was -1% (as monitored on this thread eh)

Good info mate, makes it dead easy for those dazzled by RYM's fancy village razzmatazz reception area's to understand. Absolutely correct. I am sure you will recall that both you and I went out on a limb in a few years ago and called RYM overvalued at that PE of 37 and correctly predicted years of underperformance. You would think given that fact more people would make an effort to understand our point of view...human beings are funny though...they get emotionally attached to "pet" stocks that they have done well with, emotional attachment even if it costs them money relative to other stocks in the same sector.

[couta1]

Good info mate, makes it dead easy for those dazzled by RYM's fancy village razzmatazz reception area's to understand. Absolutely correct. I am sure you will recall that both you and I went out on a limb in a few years ago and called RYM overvalued at that PE of 37 and correctly predicted years of underperformance. You would think given that fact more people would make an effort to understand our point of view...human beings are funny though...they get emotionally attached to "pet" stocks that they have done well with, emotional attachment even if it costs them money relative to other stocks in the same sector.

HaHa Beagle,emotionally attached to "pet"stocks, SUM what ironic that statement mate. PS-Ive become very attached to a certain retail chain and their glossy, pleasing to the eye annual reports.Lol.

[Beagle]

HaHa Beagle,emotionally attached to "pet"stocks, SUM what ironic that statement mate. PS-Ive become very attached to a certain retail chain and their glossy, pleasing to the eye annual reports.Lol.

LOL for SUM "strange reason" I keep all their annual reports