With the ASX index trading at close to its all-time high since the GFC it may not be the best idea to buy index-like investments at today's levels.
However, that doesn't mean that all shares are expensive today. If you look in the right places you can find value. I think that National Veterinary Care Ltd (ASX: NVL) is trading at good value at $2.13.
What is it?
National Vet Care is the second largest veterinary clinic business in Australia and New Zealand with 66 clinics at the last count. It has a pet wellness program and also a clinic management & procurement service.
Why has the share price fallen?
The National Vet Care share price has fallen by around a third since the start of the year.
Some of the fall was related to the negativity affecting industry leader Greencross Limited (ASX: GXL), which reported that standalone vet clinics were facing difficulty.
However, National Vet Care then announced that revenue was below expectations in May and June, which subsequently affected the earnings before interest, tax, depreciation and amortisation (EBITDA) margin.
Still a lot to be positive about
National Vet Care was still predicting that revenue would be 25% higher in FY18 than FY17. It also predicted a further 25% revenue growth in FY19.
In that same update the company revealed that pet membership has increased by 72% since the start of the financial year to 18,500. The management service business has experienced growth of 23%.
The pet industry has been growing at a nice rate. The total value of the industry in Australia has reached $12 billion, which is up 42% since 2013. Around 62% of households have a pet, with 79% of dogs and 65% of cats going to the vet each year.
Australia's cities are large and continue to grow, offering more potential sites for vets. Plus, the increase in density of living offers current vets more potential clients for the catchment area.
Advancing surgical and diagnostic procedures also offers more services that National Vet Care can offer to clients.
Foolish takeaway
If I make a guess of 11 cents of statutory earnings per share (EPS) for FY18, National Vet Care is trading at 19x FY18's estimated earnings. If it grows EPS by more than 20% in FY19 then it's trading with a PEG ratio of less than 1, which is attractive.
National Vet Care looks like a decent long-term buy to me at the current price. I may buy more depending on what the reaction is to the FY18 report and if management can give a positive outlook for FY19.
