The National Veterinary Care Ltd (ASX: NVL) directors have been buying shares lately. According to two 3Y announcements today, one director acquired 4,468 shares on 11 May 2018 on the market and one director bought 20,000 shares on the market on 11 May 2018.
Now, it's not as though these are huge moves worth millions of dollars, but there's usually only one reason that management buy shares: they think they're good value.
On 11 May 2017 the share price was around $2.45, which was around a 22% drop from the all-time high at the start of the year, it has followed the Greencross Limited (ASX: GXL) share price down. In some people's books this would represent a crash, although it has been more of a steady decline over the past five months.
I believe National Veterinary Care is one of the more exciting small cap opportunities because it is steadily acquiring other veterinary clinics to grow its business. It now numbers in the 60s and has a loose aim of adding around six new clinics each year.
The pet industry is growing as the number of pets increases with the human population and the number of pet services increases. Vets are benefiting from pet owners taking out pet insurance, which makes it more likely people will say yes to an expensive procedure.
National Vet Care has a clever pet membership program which encourages owners to bring their pets to the vet at least once per year, which is a good source of recurring revenue. It can also lead to additional revenue if the pet requires veterinary aid.
Foolish takeaway
National Vet Care is trading at around 23x FY18's estimated earnings, which I believe is a fair price to pay considering how much the business may grow over the next two or three years. It also has a starting dividend yield of 1.2%, although I'm sure the business plans to grow the dividend over the years. I'd be happy to buy more National Vet Care shares at the current price.
