Motley Fool Australia

Investors weren’t smiling about this small cap’s acquisition news

man smiling through magnifying glass
Image Source: Getty Images

The 1300 Smiles Limited (ASX: ONT) share price fell 2.5% today after reporting its latest acquisition to the market.

The dental business, which offers affordable dental plans to customers, announced another Queensland acquisition.

It’s going to acquire a large established 5-chair dental practice in the northern Brisbane suburb of Strathphine, which is quite close to another of the company’s large facilities.

This announcement follows-on from an announcement made a couple of weeks ago where it said it was acquiring two other South-East Queensland dental practices.

All of these acquisitions combined are expected to deliver additional annual revenue of around $6.5 million, with profitability within the normal and expected range.

1300 Smiles described Strathpine as located approximately 22km north of Brisbane’s CBD and close to the Sunshine Coast motorway.

1300 Smiles Managing Director Dr Daryl Holmes said “This is an exciting further new acquisition, in this strategic Brisbane – Sunshine Coast growth corridor, complementing our existing very successful practice in this area, with great synergies & future potential. It’s wonderful to deliver on our recently forecast intention to grow by further strategic & larger Practice acquisitions that meet or exceed our strict criteria & benchmarks.”

Foolish takeaway

1300 Smiles is trading with a grossed-up dividend yield of 5.7%. I think it seems like an interesting way to get a grow dividend stream away from the typical ASX shares that you normally see on the ASX. Whilst dental services are somewhat discretionary, they may be able hold up a bit better than spending on TVs because how important people view their teeth.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

Related Articles…

Latest posts by Tristan Harrison (see all)