Nice write up and clearly a quality company. A pharmacy isn't going to stock multiple brand due to shelf space so if they can continue to hold the shelf they will do well. Huge amount of debt going into a environment of higher rates for longer. Seems like 2-3 years to get the debt under control assume no more acquisitions. If management is acquisition trigger happy it could be a issue. Is is fair to combine "FCF yield of 2,4% and a Div/SBB yield of 2,7%" to get a combined shareholder yield of 5.1%? Large payout ratio as I assume that means a low reinvestment rate or Atos might give more reinvestment opportunities? Seems ideal for Terry Smith or what might he say?
Thanks a lot! I wouldn't combine the FCF yield and Div/SBB yield as most of the fcf is paid back to shareholders as dividends or share buybacks. In that case, you would count it twice. Generally speaking, it's not a very capital-intensive business. But they are going to reinvest more through M&A in the future. I think it would be pretty ideal for Terry Smith if the valuation was slightly more attractive.
Nice write up and clearly a quality company. A pharmacy isn't going to stock multiple brand due to shelf space so if they can continue to hold the shelf they will do well. Huge amount of debt going into a environment of higher rates for longer. Seems like 2-3 years to get the debt under control assume no more acquisitions. If management is acquisition trigger happy it could be a issue. Is is fair to combine "FCF yield of 2,4% and a Div/SBB yield of 2,7%" to get a combined shareholder yield of 5.1%? Large payout ratio as I assume that means a low reinvestment rate or Atos might give more reinvestment opportunities? Seems ideal for Terry Smith or what might he say?
Thanks a lot! I wouldn't combine the FCF yield and Div/SBB yield as most of the fcf is paid back to shareholders as dividends or share buybacks. In that case, you would count it twice. Generally speaking, it's not a very capital-intensive business. But they are going to reinvest more through M&A in the future. I think it would be pretty ideal for Terry Smith if the valuation was slightly more attractive.