The Healthscope Ltd (ASX: HSO) share price has fallen 40% to $1.78 this year as mediocre results impacted investors:
Back at $1.78, Healthscope is now priced at around 17x earnings or approximately 11x on an enterprise value to EBITDA (EV/EBITDA) ratio. Neither is a screaming bargain but the company doesn't look hugely overpriced, either. Much of the debt is funding new hospitals, which should contribute to growth in time.
If you take a long-term view, with around 4% earnings growth per annum and a 4% dividend, Healthscope could prove a respectable earner, especially if it is able to expand by building new hospitals.
In my view the current market pressures, particularly with the large insurance players, mean that Healthscope is unlikely to shoot the lights out with earnings growth. I can't see it being a huge winner in the short term, but it is worth a closer look for long-term dividend investors.
