Could Ramsay shares be a buy today?
The post The Ramsay Health Care (ASX:RHC) share price is down 5% in 8 days. Could it be a buy? appeared first on The Motley Fool Australia. –
The Ramsay Health Care Limited (ASX: RHC) share price is having a pretty decent start to this Wednesday’s trading. At the time of writing, Ramsay shares are up a healthy 0.31% to $68.38 a share.
However, zooming out, and the picture isn’t quite so bright. Ramsay shares are now down around 5.1% since Friday 3 September. That’s a pretty nasty drop for a 12-day span.
The company is faring… ok in 2021 so far, up close to 9% year to date. It’s up a rather paltry 2.7% over the past 12 months. Compared to the S&P/ASX 200 Index (ASX: XJO), this is arguably quite poor, seeing as the ASX 200 is up close to 11% in 2021 so far, and almost 26% over the past year.
So what’s been happening with Ramsay that might have sparked this recent bout of volatility?
Earnings and dividends…
Well, the short answer is… not much. Ramsay has announced no major news or developments since the announcement of its FY21 earnings report last month. Just to recap, the company reported a healthy lift in earnings by 29.1% to $1.13 billion, and a 58.1% jump in statutory profit to $449 million.
Of course, those numbers are coming off a low base, since FY20 was a pretty tough year for this healthcare company. But even so, investors seem to have given their approval, seeing as the Ramsay share price remains above it’s pre-earnings pricing by around 0.7% as of today.
But perhaps the single biggest reason why Ramsay has had a rough couple of weeks is the company’s dividend. Last month, in addition to the metrics above, Ramsay announced a final dividend for FY21 of $1.03 a share, bringing its full-year dividend to $1.515 per share.
Ramsay traded ex-dividend for this final payout on 6 September. This caused the usual share price dip, reflecting that new shareholders will not be eligible for the payout.
This dip (which is one of the best reasons to have a share drop in value) is the primary reason why Ramsay shares have gone backwards by around 5% since 3 September. Eligible shareholders will receive this dividend on 30 September.
So could Ramsay shares be a buy at these current levels?
Could the Ramsay Health Care share price a buy today?
Well, one fund manager who thinks so is Tribeca Investment Partners fund manager Jun Bei Liu. My Fool colleague Tony interviewed Ms Liu this week, and it turns out she is very bullish on Ramsay shares right now. Here’s some of what she told the Motley Fool:
Ramsay, obviously private hospitals, and elective surgery at the moment is being suspended — it’s having an earnings impact. However, remember, this is infrastructure-like, private hospital assets. It used to trade at such a big premium to the market, at a premium to the other healthcare businesses.
Now it trades just over 20 times [forward P/E ratio]. The rest of the healthcare sector trades at over 40. And this is a business, structurally, things are looking better, not looking at the pandemic.
At the current Ramsay Health Care share price, this company has a market capitalisation of $15.57 billion and a dividend yield of 2.22%.
Should you invest $1,000 in Ramsay Health Care right now?
Before you consider Ramsay Health Care, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Ramsay Health Care wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.