I have been writing about VCA Antech (Nasdaq:WOOF) for years, albeit not always on a consistent basis, and I clearly remember the baying, barking, and growling from longs when I used to question the company's valuation and business model. This was back when the stock traded in the $30s, mind you, and everyone believed that the veterinary practice roll-up model was bulletproof. Well, I wasn't short the stock then (nor am I now) and I wasn't being paid by hedge funds (nor am I now), but I was right - the business model couldn't support the valuation and investors who ignored the warning signs and hung on took a bruising. (To know more about stock valuation, check out: DCF Valuation: The Stock Market Sanity Check.)
Nowadays, though, it is a different story. I still do not believe that business models predicated on continual acquisitions can work (it's been tried over and over again in people-medicine), but the fact remains that VCA Antech now has a leverageable installed base and an undervalued cash flow stream.
Read the full article here:
http://stocks.investopedia.com/stock-analysis/2011/VCA-Antech-Cut-Down-To-Value-WOOF-PETM-IDXX-MWIV1031.aspx
No comments:
Post a Comment