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Strategies & Market Trends : Value Investing

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To: Jurgis Bekepuris who wrote (38597)	7/24/2010 1:12:51 AM
From: Spekulatius	Read Replies (2) of 78743

Interesting, I thought about COV and MHS as high ROE business but of course it depends on which numbers you look at. COV for example has about 8B$ in equity (including intangibles) and generate 1.5B$ in after tax earning from continuing operations which is not too bad. Most of those earnings go straight into FCF (little Capex). MHS looks similar with a 20% ROE (including intangibles). This looks pretty much in line with DGX, so I am not sure what you are looking at. In any case, as discussed before, I am not a big fan of ROE because if intangibles are counted in there are multiple ways to get to different equity nominators, depending on how the cooperate entity was created. All those stocks are at about 11-12x earnings (including BEC) with high single digit growth and significant FCF, so i think it's pretty much a wash in terms of valuation.

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