RYM - Ryman Healthcare

[muss1]

Fair enough. I use the 35 based on the underlying earnings and because it is conservative. That could be too simplistic, but it makes me uneasy about holding in the mid-term

[Vaygor1]

Fair enough. I use the 35 based on the underlying earnings and because it is conservative. That could be too simplistic, but it makes me uneasy about holding in the mid-term

If I was thinking about buying any more RYM, I don't know if I would get in now or hold off for a while.

With 6 months till the next announcement now, prospective buyers lose a bit of interest over the next 4 months and the price could drop, but I have difficulty imagining it dropping below $8.

On the other hand, most of the insto's take a few weeks to analyse the results and won't really do so until the official annual report is released. Once analysed, the price could jump…it reached $9.10 not long ago on pre-announcement and 42% increase in IFRS profit is a pretty awesome result.

A RYM director investing 6 figures yesterday on RYM at $8.42 would give me some comfort.

If your thinking of selling, I can't help you. I have never sold any so it would be hypocritical of me to advise otherwise. If it's any consolation, I'm not about to sell and would only do so if I really needed the money for something else.

[Beagle]

PE of 35 assumes the companies earnings will be constant for the next 35 years from the purchase date.

eg
1 Share = $35. Earnings per Share at purchase time = $1/annum. PE = 35
Share earns $1/annum every year for 35 years. Share pays for itself in 35 years. So 35 years on, looking back the PE was in fact 35.

But if the Share's earnings grow by 20%/annum compounding, its earnings one year later will be $1.20 so earnings for the 11 years following purchase date are:
$1.2+$1.44+$1.73+$2.07+$2.49+$2.99+$3.58+$4.30+$5. 16+$6.19+$7.43 = $38.58
ie after 11 years since purchasing the share, it has earned itself more than the value you payed for it so the actual PE (with 11 years hindsight) you bought it for was less than 11. About 10.5 in fact.

Goes the other way too of course. Buy a $35 share with a PE of 35 and the company goes broke soon after. Final PE = infinity. ie The Share will never pay for itself.

You sir are dreaming if you think RYM's long term perpetual growth rate is 20%...we need to coin a new phrase, you know a derivitive of rose coloured glasses, perhaps Ryglass, (with apoligies to Rayglass who make very good boats).
You can buy good stocks that are also growing for a thrid of the price or less, on a relative PE basis, (AIR HNZ and a speccy on PGW), or buy a stock in the same sector that grew underlying earnings at 46% last year on the same PE, (SUM).

Any way you slice and dice this RYM thing it reads "Market darling, priced for absolute perfection"...but what if they don't achieve perfection in execution and growth going forward...

[Vaygor1]

You sir are dreaming if you think RYM's long term perpetual growth rate is 20%...we need to coin a new phrase, you know a derivitive of rose coloured glasses, perhaps Ryglass, (with apoligies to Rayglass who make very good boats).
You can buy good stocks that are also growing for a thrid of the price or less, on a relative PE basis, (AIR HNZ and a speccy on PGW), or buy a stock in the same sector that grew underlying earnings at 46% last year on the same PE, (SUM).

Any way you slice and dice this RYM thing it reads "Market darling, priced for absolute perfection"...but what if they don't achieve perfection in execution and growth going forward...

In my example I wasn't referring to Ryman.

[Joshuatree]

vaygor is either (a) clearly trolling and has caught some big fish in this thread, or (b) has no idea how company valuation works. Both are equally amusing.

Really not necessary stooping like this. Its been a great debate , no need to bring it down.

[Vaygor1]

p.s. vaygor. The PE is completely agnostic to the potential rate of future growth.

And that is the problem in relying solely on it.

As per PT's post ( http://www.sharetrader.co.nz/showthr...l=1#post481906 ) is RYM's current PE 35, 21.6, or 16.6? What would it be if reported under GAAP?

Further, how subjective is RYM's future growth rate? Obviously quite subjective given this thread. But one can look back and work out the PE historically that one purchased at (make up a different name for it if you don't like the term PE in this sense), and using predictable company growth, one can also look ahead. it's just another tool.

Also, just FYI: What really matters is the PEG ratio, not the PE itself. The former equals the latter divided by the expected rate of growth. Thus, if the expected rate of growth exceeds the current PE, the ratio is less than one and usually considered a good buy (and vice versa).

Hope this helps. Sounds like you might need it!

Thanks for stating the obvious re PEG.
Personally I prefer YPEG. http://www.fool.com/investing/beginn...aluations.aspx

[Beagle]

Raising the tone a bit, (hopefully), what I find more than a little frustrating is that while SUM appears to be substaintially better value than RYM, (last years profit growth 46%) for a PEG of well under 1, PEG of Ryman is about 2, Sum's reluctance to give any forward guidance (other than it won't replicate last years growth rate), is somewhat annoying, especially seeing as its peer group, both MET and RYM are happy to do so, (note MET's projected profit upgrade today). I think SUM's directors need to have a think about this at some stage in the future.

[Harvey Specter]

Or maybe they are reluctant because they think growth will be so great, that forecasting to far in advance may cause issues should their aspiration targets not be met. Glass half full approach.

[Joshuatree]

And the winner is...... Metlifecare Year To date 31.45% gain

Ryman YTD 27.5%

Summerset YTD 17.06% source NZX

[Beagle]

Does it really matter, Roger? It just means the SP will be a bit more "surgey" than it might be otherwise, but shouldn't affect its long term prospects (IMHO).

Yes and No mate.. Forecasting and clearly articulating stratagy is never a bad thing...my impression is as they're a relativly young company and they don't really have the technical ability. Some computerised modelling wouldn't do any harm IMHO.