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Pacific Smiles (ASX:PSQ) share price jumps 13%. Here’s why

The Pacific Smiles share price is surging higher this morning after the company announced a FY21 trading update and revising its earnings.
The post Pacific Smiles (ASX:PSQ) share price jumps 13%. Here’s why appeared first on The Motley Fool Australia. –

asx share price gain represented by closeup of man with big smile

The Pacific Smiles Group Ltd (ASX: PSQ) share price has risen by more than 13% in early trade, after the dental operator provided its FY21 guidance this morning. At the time of writing, the Pacific Smiles share price is trading at $2.40, up 28 cents to a new, 52-week high.

What’s driving the Pacific Smiles share price?

The Pacific Smiles share price is surging higher after the company reported it expects patient fees to grow by 25%-30%, up from a previous guidance of 20%.

As a result, Pacific Smiles expects its underlying earnings before interest, tax, depreciation, and ammortisation (EBITDA) growth to be in the range of 35%-45%, revised up from 25%.

The company said the forecast is based on the assumption that trading in the second-half of FY21 will be without significant COVID-19 disruptions.

Pacific Smiles also announced plans for the opening of approximately 14 new dental centres, revised up from 12 previously.

FY21 trading update

As part of today’s announcement, Pacific Smiles also provided a trading update for FY21.

The company advised its same-centre patient fee growth is approximately 14.6% for the financial year to date period, ending 8 December 2020.

Pacific Smiles reported that up to that date, 7 new centres had already opened, with a further 7 sites committed for the rest of FY21.

About the Pacific Smiles share price

Pacific Smiles currently operates 94 dental centres at which independent dentists practise and provide treatments to patients. Revenues and profits are primarily derived from fees charged to dentists for the provision of these fully serviced dental facilities.

Pacific Smiles achieved strong growth before the impact of the coronavirus pandemic. However, in the second half of FY20, the dental service took a significant hit when lockdowns took effect. 

In the first half of FY20, the company’s EBITDA was up 15% to $12.9 million. However for the full year, its underlying EBITDA was $23.5 million, up just 2.9% compared to 2019.

The Pacific Smiles share price however, has gained almost 38% this year. At their current levels, Pacific Smiles shares have now eclipsed their previous 52-week high of $2.19 reached earlier this month.

The company currently commands a market capitalisation of around $325 million.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Pacific Smiles (ASX:PSQ) share price jumps 13%. Here’s why appeared first on The Motley Fool Australia.

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