National Veterinary Care Ltd (ASX: NVL) is one of Australia's largest veterinary clinic businesses with plans to have 62 veterinary clinics once acquisitions have been finalised.
The National Veterinary Care share price has grown by 56% over the last year and I think there is plenty more to come because of the following reasons:
Strong acquisition strategy
Management have been adding a steady flow of veterinary clinics. Management have previously stated an aim of adding six clinics a year, but the rate of recent additions has been ahead of this.
At the start of FY17 the business had 41 clinics and now it's on track to have 62, which is a huge rise over a short period of time.
Roll-up strategies can be risky but management are doing well with it so far.
Growing pet population
The pet population has been steadily growing alongside the human population and this is a good driver for future earnings of the pet industry. There are now 4.8 million dogs and 3.8 million cats in Australia.
If National Vet Care can keep growing its network of vets around Australia and New Zealand it should be onto a winner.
High uptake of vet services
Any business that can generate recurring revenue from clients or customers is a business that should be looked at.
In Australia, 79% of dogs and 65% of cats go to the vet at least once a year. This a great source of regular revenue for National Vet Care.
Best for pet program
National Vet Care is rolling out a wellness program called 'Best for Pet', which includes a number of services. Once this program has been implemented at a clinic it led to an average increase of 94% of client expenditure. This is a great initiative to boost revenue at each clinic and should boost margins in the future.
Foolish takeaway
National Veterinary Care is currently trading at 23x FY17's estimated earnings and is expected to soon start paying a dividend. I think this a good price to pay for a fast-growing business with a good long-term future.
