Q: Hello 5i,
Is this a good entry point at this level ? Your thought about this company please.
Thanks
Is this a good entry point at this level ? Your thought about this company please.
Thanks
5i Research Answer:
DNTL is a $1.6B company trading at 21X earnings. It is a 'roll up' company, buying a network of dental practices and then trying to use scale to drive down costs and profit. As such, debt is very high, but growth is starting to kick in. It has been largely unprofitable until recently. EPS is expected to grow about 20% next year. The last quarter was OK and it did raise guidance for the Q3 (affirmed for the full year). It is still relatively early in its strategy (about 600 locations), so future M&A activity is likely to be the main driver. It added 8 locations in the recent quarter. We like it, but don't love it. Debt is the main risk, and roll-up strategies are always risky in general.