The Healthscope Ltd (ASX: HSO) share price has dropped by 45% over the past 12 months. I think this beaten-down price makes it worth considering.
Healthscope is the second largest private hospital operator in Australia. Here's why I think you should consider Healthscope for your portfolio:
Still has strong ageing tailwinds
Healthscope is exposed to a strong tailwind of Australia's ageing demographics.
The older we get the more likely we are to need to go to a hospital. Australia's over-65 age bracket is predicted to increase by 75% over the next 20 years.
Even with Healthscope's large share price fall, the long-term opportunity still remains.
Still has an impressive list of projects
Healthscope is trying to capitalise on the above ageing demographic opportunity by growing its number of hospital beds and operating theatres.
By FY19 management expect to add 566 more beds and 38 operating theatres. It plans to do this through new builds and expansions.
Even with Healthscope's large share price fall it is still carrying on with its impressive list of construction projects regardless of the market's opinion.
Better value
The price decline has seen Healthscope's price/earnings ratio fall to a much more attractive number. Even though the FY17 earnings took a hit, the FY18 and FY19 earnings should be on track for a good recovery.
Healthscope is currently trading at 16x FY19's estimated earnings.
A bonus is that the dividend yield has grown substantially too, the unfranked yield now sits at 4.14%.
Is it a buy?
I can't see the share price falling much lower but it should be fairly easy to generate long-term returns because of the expected growth in total hospital utilisation over time.
