E Old Men, Value Companies

UHS’s robust balance sheet had $1.1 billion in cash and equivalents, and $5.95 billion worth of retained earnings as of September 30, 2020. About 45% of its property and equipment has been depreciated so far, implying that the company has set up a strong moat.

UHS is a hugely profitable company – its EBITDA margin (TTM) of 16.6% and Return on Common Equity (TTM) of 15.47% outperform the sector medians of 5.82% and −36.79%, respectively. However, its dividend yield is poor at 0.31%.

3. FIRST REPUBLIC BANK (FRC)

CEO: James H. Herbert, II
Age: 76 years
Market Price:  $130, as of November 13, 2020
Market Cap: $22.6 billion

James co-founded FRC in 1985 and has been its CEO since then. Of late, the stock has been under pressure because it expects gross proceeds of about $198.3M on its underwritten public offering of 1.5 million shares, translating to a price of about $132 per share, which is more or less equal to its last market price.

FRC is a well-managed company that reported a TTM Net Income margin of 28.33% and a Return on Common Equity (TTM) of 10.57% as compared to the sector medians of 20.91% and 8.07%, respectively. However, its TTM Price/Earnings (GAAP) ratio of 24.09 and a Forward Price/Sales ratio of 5.90 are high as compared to their respective medians of 12.67 and 2.49. Also, its current dividend yield is just 0.61%.

The stock looks expensive. Moreover, the financial sector is lagging because of low-interest rates.

Image Source: FRC’s Valuation Sheet

4. CENTENE CORPORATION (CNC)

CEO: Michael Neidorff
Age: 77 years
Market Price:  $63, as of November 20, 2020
Market Cap: $36.5 billion

Managed care companies like CNC are possibly staring at a bright future, especially if the Supreme Court does not do away with the Affordable Care Act. In Q3 2020, the company beat EPS and revenue estimates by $0.30 and $791 million, respectively, despite the raging pandemic.

The stock with a Forward Price/Earnings (GAAP) ratio of 20.49 seems undervalued when you compare it to the sector median of 33.30. However, its low Forward Price/Sales ratio of 0.36 as compared to the sector median of 6.75 suggests that the stock is currently not being fancied much by investors. It also does not pay a dividend. However, 16 analysts have revised its earnings estimates upwards for Q4 2020, which is a bullish signal.

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Disclosure: I have no position in the stocks discussed, and neither do I plan to buy/sell it in the next 72 hours. I researched and wrote this article. I am not being compensated for it (other ...

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William K. 1 year ago Member's comment

Four examples of fairly old men running very successful companies. Certainly proof that it can be done by some people. But how old were they when the companies first took off and became quite profitable? Like many other talents and skills, their skills become better with practice. Sufficient practice does lead to improved skills, that holds in most fields, except competitive drinking, an area not on the path to success and prosperity. How nany folks aged 70 and over start a company that becomes a success? There is a big diffeence as I see it.