Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: ParPlusAccrued	1/30/2012 10:53:32 AM
	Read Replies (1) of 79057

PharMerica (PMC) seems interesting at these levels. Company is the second-largest institutional pharmacy (serve nursing homes and assisted living facilities) after Omnicare (OCR). OCR had attempted a hostile tender of PMC at $15 / share, which PMC management was against citing anti-trust concerns and inadequate consideration. FTC on Friday sued OCR to block the deal - PMC trading down from $14.30 to $12.40 today. PMC seems interesting at current levels - trading at <6.5x EBITDA and a 13% - 14% FCF yield. Company is levered 2.7x . Private equity has been rumored to be interested in PMC and activity may pick up now that OCR is effectively gone. PMC is also a manageable size with a $600MM EV. OCR itself it trading at 8.5x EBITDA and has historically traded at 8.0x - 8.5x EBITDA. If PMC can trade at those levels, would trade close to $20.00 PMC isn't a "great" company by any means (5.0% EBITDA margins, 2.5% - 3.0% FCF margins), but that doesn't mean it can't be a good investment. PMC is trading at less than BV even though the business still generates 12% - 15% ROE. Given that PMC is the only legitimate competitor to OCR and that their customers would want to have a second option as a check on OCR, I feel like that alone will keep PMC in the game.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next