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Why National Veterinary Care Ltd share price is up 6% today

The National Veterinary Care Ltd (ASX: NVL) share price has been a big mover in morning trade.

At the time of writing the growing veterinary company’s shares are up 6% to $2.50.

What happened?

This morning National Veterinary Care provided an update on its acquisition pipeline.

As well as noting that it has successfully completed the acquisition of one veterinary clinic in New South Wales, the company advised that it has entered into binding agreements to acquire four clinics and has entered into heads of agreement for a further two veterinary clinics located in Queensland.

Subject to completion of due diligence, finalisation of acquisition agreements, and satisfaction of conditions precedent, management expects these acquisitions to settle by 30 September 2017.

According to the release, these seven clinics are expected to deliver annual revenue of approximately $10.3 million, with aggregate annual earnings before interest and tax (EBIT) of approximately $2.4 million.

The total consideration for the seven acquisitions expected to be $11.7 million, with a total upfront payment of $9.8 million and a deferred component of $1.9 million.

Should you invest?

At less than 5x estimated EBIT, I believe this deal is great value for money and I can’t say I’m surprised to see its shares charge higher today.

In my opinion National Veterinary Care is one of the best small-cap shares to invest in on the Australian share market right now and a great alternative to industry giant Greencross Limited (ASX: GXL).

After all, with the veterinary care market highly fragmented, I believe the company has the potential to grow significantly through acquisitions like the ones announced today.

For this reason I would class the company as a buy.

Here are three more shares which I would class as being buys now as well.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Greencross Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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