Opinions
Jordan Zinberg
dentalcorp Holdings Ltd
DNTL-T
RISKY
Jul 26, 2024
$8.060
Stock price when the opinion was issued
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Their future looks strong. They've been acquiring dental offices of various sizes. The costs of dental track inflation, so there is increased revenues from this sector. People need their teeth to be look after regularly, so dental won't be impacted much by a recession. However, interest rates do pressure this sector. DNTL has lots of runway in Canada as well as the U.S, to expand.
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BUY ON WEAKNESS
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research.
DNTL is still getting into its acquisition and roll-out strategy, and currently trades at an OK valuation.
The company has a strong equity position of $1.8 billion on a $1.6B market cap, although $2.1B of its assets are in goodwill, which can change quickly if an impairment charge takes place.
Revenue growth has been averaging in the 20%+ range, and it generates positive free cash flows which is mostly puts towards acquisitions.
We would like to see the company maintain or grow its current sales growth rates, and increase its profitability before stepping in here, but largely the company is on a decent trajectory.
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Good business that is defensive. However, debt levels high - has grown thorough debt. Would recommend watching. EBITDA would suggest company is cheap - however a true analysis of the business would suggest interest rates are a burden. Would recommend investing if the debt levels fall.