RYM - Ryman Healthcare

[winner69]

Whether its markets as a whole or just individual stocks buying at elevated multiples invariably leads to disappointing returns. Conversely buying at low multiples invariably leads to the good returns. Sort of buy cheap (low) sell expensive (high) approach.

In simple terms - high PE leads to low future returns / low PE leads to superior future returns.

Plenty of academia to show this works in so far as markets go but it seems to work out this way for even the best companies, even ones who have demonstrated decades of continuous growth

RYM has had enough history to do a meaningful analysis

Chart shows the 3 and 5 year annual returns for RYM from different starting PEs

Based on underlying earnings. Currently a PE of over 40 on this basis

History would indicate negative returns over the next 3 and 5 year periods - even though RYM will no doubt continue to grow earnings

That's why I watch the linear regression line on the RYM chart ......the squiggly line will one day head down

Each dot represents a PE and the subsequent 3 (or 5) year annual returns. shareprice only / no dividends

Vertical axis is % return pa and horizontal axis starting PE