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Ramsay Health Care Ltd RHC

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Stock XASX Rating as of
A$41.25 −0.14 (0.34%)
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As of Delayed Price Open

Company Report

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Ramsay Health Care Earnings: Shares Undervalued Despite Challenging Outlook

Shane Ponraj

We cut our fair value estimate for narrow-moat Ramsay Health Care by 9% to AUD 62. Fiscal 2024 revenue from patient activity grew 7% in constant currency to AUD 16.7 billion, in line with our expectations, driven by 3% volume growth, tariff uplifts, and new capacity. However, underlying EBIT of AUD 1.034 billion was up a smaller 6%, and 9% below our forecast. The result was dragged down by underlying EBIT in France falling 21%. The decline largely reflects lower government support that is significantly lagging cost inflation. While future earnings in France are supported by a 3.2% tariff increase from July 2024, indexation will be 0.6% in the UK, and, overall, wage growth is likely to outpace tariff indexation in Europe.

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Price vs Fair Value

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RHC is trading at a 628% premium.
Price
A$41.39
Fair Value
A$92.00
Uncertainty
Medium
1-Star Price
A$72.20
5-Star Price
A$11.10
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Ramsay is entrenched as the market share leader in Australia, which contributes the bulk of group earnings and remains an attractive market, given relatively stable participation in private health insurance.

Bears

Elevated safety costs and staffing challenges are lingering with continued coronavirus surges.

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News

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Trading Information

Previous Close Price
A$41.39
Day Range
A$41.12–41.75
52-Week Range
A$38.70–57.23
Bid/Ask
A$41.24 / A$41.25
Market Cap
A$9.48 Bil
Volume/Avg
180,296 / 642,699

Key Statistics

Price/Earnings (Normalized)
42.01
Price/Sales
0.57
Dividend Yield (Trailing)
1.93%
Dividend Yield (Forward)
1.93%
Total Yield
1.93%

Company Profile

Ramsay Health Care is one of the largest private healthcare providers in the world, with over 460 facilities across 10 countries. The key markets in which it operates are Australia, France, the UK, and Sweden. It is the largest private hospital group in each of these markets except for the UK where it ranks fifth. Ramsay Sante, which operates the European regions other than the UK, is a 52.5%-owned subsidiary of Ramsay Health Care. The company typically earns about 60% of consolidated earnings in Australia and 30% in France. Ramsay Health Care undertakes both private and publicly funded healthcare.
Sector
Healthcare
Industry
Medical Care Facilities
Stock Style Box
Mid Core
Total Number of Employees
88,000
Website
https://www.ramsayhealth.com

Competitors

Valuation

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Metric
RHC
SHL
THC
Price/Earnings (Normalized)
 42.0124.6617.09
Price/Book Value
 2.051.614.55
Price/Sales
 0.571.410.80
Price/Cash Flow
 7.3211.849.02
Price/Earnings
RHC
SHL
THC

Financial Strength

Metric
RHC
SHL
THC
Quick Ratio
 0.760.781.24
Current Ratio
 0.930.941.45
Interest Coverage
 0.615.956.18
Quick Ratio
RHC
SHL
THC

Profitability

Metric
RHC
SHL
THC
Return on Assets (Normalized)
 1.44%4.07%3.49%
Return on Equity (Normalized)
 6.86%7.01%43.46%
Return on Invested Capital (Normalized)
 1.78%4.52%8.17%
Return on Assets
RHC
SHL
THC

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