Private hospital operator Ramsay Health Care Limited (ASX: RHC) will tomorrow release its financial results for the six months to December 31 2014. The company has long been a stalwart of conservative portfolios owing to the growing demand for general healthcare, and the government's push to place a greater proportion of healthcare spending onto private companies.
Shareholders are rejoicing
Ramsay Health Care Limited has the esteemed honour of being one of the best large companies to invest in over the last five years. Five years ago today, Ramsay's share price sat at around $12. Today it trades above $64 with no end in sight to its rapid ascent, in fact the share price seems to still be accelerating!
Over the last five years Ramsay's revenue has jumped from $3.3 billion to $4.9 billion, while net profit has surged from just $89 million in the 2009 financial year to $289 million last financial year.
Growth, Growth and MORE Growth
Ramsay, which now has operations in Australia, France, the UK, and Asia, employs over 30,000 staff to service over 10,000 beds and the group's international expansion is expected to see revenue and profit continue growing for many years yet.
Ramsay has guided to between 14% to 16% improvement in net profit after tax, or NPAT, and earnings per share, EPS, for the 2015 financial year that ends on June 30 this year. This implies a NPAT of between $380 and $385 million and EPS of 187 cents to 190 cents. Investors should expect approximately half of these numbers tomorrow.
Ramsay is therefore sitting on a price to earnings ratio of approximately 34 times, and at a 50% payout ratio the company will pay a dividend yield of approximately 1.4%.
Certainly few investors look at Ramsay for its dividend potential, but with the terrific track record of current management analysts expect that this will be more than substituted for by future capital gains.
