Halloween may not be a widely-celebrated holiday in Australia, but for many, any chance to exercise their sweet tooth will not be missed.
These 3 S&P/ASX 200 dentistry shares are hoping you break a tooth on your toffee today.
Pacific Smiles Group Ltd (ASX: PSQ)
Small-cap dental centre operator Pacific Smiles Group Ltd shares are up more than 3% today to $1.34 – a welcome rise for the stock which has dropped from its price point of $1.88 at this time last year.
Pacific Smiles released its FY18 results back in August, revealing patient fee rises of 12% had yielded $164.5 million for the company with same-centre growth up 5.1% and EBITDA up 2.9% to $12.5 million while NPAT dropped 9.7% to $9.3 million.
The gap in margins has unsurprisingly concerned many investors, but Pacific seems focused on its growth phase particulars at present, with the acquisition of 28 denture clinics flowing in from last November and an expansion plan to continue to grow its dental centres and employees.
Roll-outs cost money, and Pacific did also pay out 6.1c per share in fully-franked dividends to investors for FY18, but shareholders will expect better profit margin going forward and Pacific needs to focus on how to best translate its successes to make this happen.
1300 Smiles Limited (ASX: ONT)
Emerging dental centre operator 1300 Smiles Limited share price is up 5.2% to $6.47 at the time of writing – recovering from a slump in share price following its results released in August.
1300 Smiles shares edged lower after it handed down FY18 NPAT of $7.6 million on its revenue of $39.1 million despite upping its NPAT by 5% and its revenue by 8.5% on FY17.
But investors seem to be back behind the dental centre provider, with 9 new facilities launched throughout FY18 and more expected in FY19 as the company focuses on organic growth.
The company seems to be scouting for new acquisitions, and its balance sheet looks solid enough to make them happen with its 3.9% dividend yield quite attractive for an emerging player.
While it’s still early days for 1300 Smiles, dentistry is a growth industry, and holidays such as Halloween and the upcoming Christmas and New Year period usually bring a surge to operations as people overindulge and their pearly whites suffer.
Afterpay Touch Group Ltd (ASX: APT)
Dental procedures are out of reach for many who can’t afford to pay $210 for a 15-minute consultation.
Enter savvy “buy now pay later” provider Afterpay Touch, which has recently expanded into the dental market as a part of its new beauty, health, entertainment and travel verticals.
Microcap ASX company Smiles Inclusive Ltd (ASX: SIL) has a deal with Afterpay to roll-out its pay later services across 52 dental practices, and if all goes well, putting a layby on your dental work could be an actual thing everywhere soon.
However, aforementioned 1300 Smiles and Pacific Smiles already have a similar agreement in place with Afterpay rival Zip Co Ltd (ASX: Z1P), so a true battle could ensue to corner this lucrative market.
Afterpay is a pretty formidable player in the space and has the edge on Zip in a few ways already, so it will be an interesting one to watch play out.
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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended 1300SMILES 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 Scott Phillips.