![]() Aside from equity, we compare the long-term debt also to the operating income as it probably describes best how much money the company can generate to pay back its debt. On the other side of the balance sheet, the company had only $118 million in cash and cash equivalents.Īs usual, we compare the long-term debt to the shareholder’s equity (which has been declining over the last quarters and is currently only $802 million) and get a debt/equity-ratio of 2.08. Due to two acquisitions in 20, the outstanding long-term debt increased from $579 million a year ago to $1,669 million at the end of June 2018 (excluding the short-term, current portion of debt). For a bear case I would focus on the debt. Debt, debt, debt….and interest paymentsįor a bull case scenario, I probably would talk mostly about the dividend. This would result in a payout ratio between 69% and 74% which is without question a very high payout ratio, but also shows that Owens & Minor is still able to cover its dividend. According to the current guidance, the expected EPS should be between $1.40 and $1.50. High dividend stocks often have the problem that the dividend is not covered by free cash flow and exceeds the earnings per share. The last aspect we have to check is the payout ratio. And although Owens & Minor can’t join the ranks of dividend aristocrats it can definitely be called a stable dividend payer. But as you can see in the following chart, the dividend growth slowed down recently. At least since 1998 the company could increase the dividend every single year it was raised about 12% on average from $0.12 annual dividend in 1998 to $1.04 annual dividend in 2018 (expected). And in most years, the dividend was also increased, but in some years the company had to keep the dividend constant. Owens & Minor has a long history of paying quarterly dividends – according to its own homepage the company is paying a dividend at least since 1972. At the time of writing (Friday, 10 th August 2018) Owens & Minor has a forward yield of 7.38% and can therefore be called a high-yield stock and is standing out in a market environment with about 2% dividend yield on average.īut it is not just the dividend yield, but also the dividend history that is impressive. ![]() (NYSE: LB) have a dividend yield above 7%. Among the 500 stocks in the S&P 500 currently only CenturyLink, Inc. The reason Owens & Minor is so interesting and is standing out among the medical distribution companies is the extremely high dividend yield. Dividendįirst of all, we are going to take a closer look at the dividend. In the following article we therefore will not only take an equity investor’s point of view (focusing on free cash flow and growth ), but also a creditor’s point of view (looking in more detail at solvency, liabilities and the company’s assets). And it is not just the revised guidance and concerns about growth perspectives that are scaring investors away, but especially the high debt levels after the last two acquisitions. ![]() But for high reward we mostly have to pay a price: high risk. It is also the low valuation in an extremely overvalued market that make it look like a real bargain. It is not just the dividend yield above 7% (at the time of writing) that make the stock extraordinary. The company and its stock are extremely interesting. Owens & Minor (NYSE: NYSE: OMI) however has not just declined 50%, but lost two thirds of its value and at least for a few days the stock seemed to be in free fall. These are companies like Patterson Companies or McKesson Corporation (NYSE: MCK) – which I covered a few days ago – that are declining despite a wide economic moat and had cut its market capitalization in half. ![]() Many medical and pharmaceutical distribution companies have been declining for many quarters now.
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