Compared with Ramsay Health Care, Healthscope is a bargain
Compared with Ramsay Health Care, Healthscope is a bargain. But is it cheap? Ramsay, Australia's largest private hospital operator, currently sports a price-earnings ratio (PER) of 34 and dividend yield of 1.7%. Despite being a very similar business, when Healthscope floats later this month it will have a PER of 25 and a yield twice that of Ramsay's. There's a lot to like about this business but, growing at only 5-8% a year, it's too expensive. Despite the defensive earnings, favourable industry fundamentals and high quality New Zealand pathology business, Healthscope looks fully priced. With a dividend yield of just 3% and private equity selling, there's not much in the way of a margin of safety. There's a good business here but we'd need a far lower share price to recommend it. Read the full article here: (VIEW LINK)
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