ASX:SHL

Stock Analysis Report

Executive Summary

Sonic Healthcare Limited, a healthcare company, provides medical diagnostic services, and administrative services and facilities to medical practitioners.

Rewards

Trading at 52.8% below its fair value

Earnings are forecast to grow 5.95% per year

Earnings grew by 15.6% over the past year

Pays a high and reliable dividend of 2.87%

Risk Analysis

Has a high level of debt

Significant insider selling over the past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Solid track record established dividend payer.


Similar Companies

Share Price & News

How has Sonic Healthcare's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SHL has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.7%

SHL

1.8%

AU Healthcare

2.0%

AU Market


1 Year Return

33.9%

SHL

29.3%

AU Healthcare

18.2%

AU Market

Return vs Industry: SHL exceeded the Australian Healthcare industry which returned 29.3% over the past year.

Return vs Market: SHL exceeded the Australian Market which returned 18.2% over the past year.


Shareholder returns

SHLIndustryMarket
7 Day1.7%1.8%2.0%
30 Day0.1%-1.9%-0.7%
90 Day4.4%5.9%0.7%
1 Year38.1%33.9%33.3%29.3%24.1%18.2%
3 Year49.4%35.2%17.4%6.5%36.0%17.3%
5 Year96.7%65.7%42.0%21.8%64.1%27.1%

Price Volatility Vs. Market

How volatile is Sonic Healthcare's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Sonic Healthcare undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SHL (A$29.22) is trading below our estimate of fair value (A$61.91)

Significantly Below Fair Value: SHL is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SHL is poor value based on its PE Ratio (23.9x) compared to the Healthcare industry average (17.6x).

PE vs Market: SHL is poor value based on its PE Ratio (23.9x) compared to the Australian market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: SHL is poor value based on its PEG Ratio (4x)


Price to Book Ratio

PB vs Industry: SHL is overvalued based on its PB Ratio (2.6x) compared to the AU Healthcare industry average (1.7x).


Next Steps

Future Growth

How is Sonic Healthcare forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

5.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SHL's forecast earnings growth (5.9% per year) is above the savings rate (1.1%).

Earnings vs Market: SHL's earnings (5.9% per year) are forecast to grow slower than the Australian market (9.3% per year).

High Growth Earnings: SHL's earnings are forecast to grow, but not significantly.

Revenue vs Market: SHL's revenue (6% per year) is forecast to grow faster than the Australian market (3.6% per year).

High Growth Revenue: SHL's revenue (6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SHL's Return on Equity is forecast to be low in 3 years time (11%).


Next Steps

Past Performance

How has Sonic Healthcare performed over the past 5 years?

7.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SHL has high quality earnings.

Growing Profit Margin: SHL's current net profit margins (9%) are higher than last year (8.6%).


Past Earnings Growth Analysis

Earnings Trend: SHL's earnings have grown by 7.2% per year over the past 5 years.

Accelerating Growth: SHL's earnings growth over the past year (15.6%) exceeds its 5-year average (7.2% per year).

Earnings vs Industry: SHL earnings growth over the past year (15.6%) exceeded the Healthcare industry 1.8%.


Return on Equity

High ROE: SHL's Return on Equity (10.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Sonic Healthcare's financial position?


Financial Position Analysis

Short Term Liabilities: SHL's short term assets (A$1.8B) do not cover its short term liabilities (A$1.8B).

Long Term Liabilities: SHL's short term assets (A$1.8B) do not cover its long term liabilities (A$2.6B).


Debt to Equity History and Analysis

Debt Level: SHL's debt to equity ratio (55.3%) is considered high.

Reducing Debt: SHL's debt to equity ratio has reduced from 63.4% to 55.3% over the past 5 years.

Debt Coverage: SHL's debt is well covered by operating cash flow (27.9%).

Interest Coverage: SHL's interest payments on its debt are well covered by EBIT (8.9x coverage).


Balance Sheet

Inventory Level: SHL has a low level of unsold assets or inventory.

Debt Coverage by Assets: SHL's debt is not covered by short term assets (assets are 0.6x debt).


Next Steps

Dividend

What is Sonic Healthcare's current dividend yield, its reliability and sustainability?

2.87%

Current Dividend Yield


Dividend Yield vs Market

company2.9%marketbottom25%2.4%markettop25%5.5%industryaverage2.8%forecastin3Years3.2%

Current dividend yield vs market & industry

Notable Dividend: SHL's dividend (2.87%) is higher than the bottom 25% of dividend payers in the Australian market (2.44%).

High Dividend: SHL's dividend (2.87%) is low compared to the top 25% of dividend payers in the Australian market (5.54%).


Stability and Growth of Payments

Stable Dividend: SHL's dividends per share have been stable in the past 10 years.

Growing Dividend: SHL's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (68.6%), SHL's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SHL's dividends in 3 years are forecast to be covered by earnings (71.3% payout ratio).


Next Steps

Management

What is the CEO of Sonic Healthcare's salary, the management and board of directors tenure and is there insider trading?

12.0yrs

Average board tenure


CEO

Colin Goldschmidt (65yo)

0yrs

Tenure

AU$5,538,541

Compensation

Dr. Colin Stephen Goldschmidt, M.B.B.Ch., F.R.C.P.A., F.A.I.C.D. serves as the Chief Executive Officer of Sonic Healthcare Limited since 1993 and has been its Managing Director since 1992. Dr. Goldschmidt  ...


CEO Compensation Analysis

Compensation vs Market: Colin's total compensation ($USD3.80M) is above average for companies of similar size in the Australian market ($USD2.88M).

Compensation vs Earnings: Colin's compensation has been consistent with company performance over the past year.


Board Age and Tenure

12.0yrs

Average Tenure

61.5yo

Average Age

Experienced Board: SHL's board of directors are seasoned and experienced ( 12 years average tenure).


Insider Trading

Insider Buying: SHL insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

BuyAU$29,07011 Dec 19
Kathryn Spargo
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Independent Director
Shares1,000
Max PriceAU$29.07
SellAU$3,319,58723 Sep 19
Christopher Wilks
EntityIndividual
Role
Member of the Board of Directors
Finance Director
Shares120,000
Max PriceAU$27.66
SellAU$6,881,34923 Sep 19
Colin Goldschmidt
EntityIndividual
Role
Chief Executive Officer
CEO, MD & Executive Director
Shares250,000
Max PriceAU$27.53
BuyAU$29,21305 Mar 19
Kathryn Spargo
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Independent Director
Shares1,230
Max PriceAU$23.75
SellAU$243,044,45328 Jan 19
BlackRock, Inc.
EntityCompany
Shares9,222,277
Max PriceAU$26.88
BuyAU$371,662,51228 Jan 19
BlackRock, Inc.
EntityCompany
Shares13,962,197
Max PriceAU$26.78

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 6.3%.


Management Team

  • Chris Wilks (61yo)

    Finance Director

    • Tenure: 30yrs
    • Compensation: AU$2.46m
  • Colin Goldschmidt (65yo)

    CEO, MD & Executive Director

    • Tenure: 0yrs
    • Compensation: AU$5.54m
  • Philip Dubois (73yo)

    Executive Director

    • Tenure: 18.4yrs
    • Compensation: AU$814.00k
  • David Byrne (60yo)

    Chief Executive Officer of The Doctors Laboratory

    • Tenure: 0yrs
    • Compensation: AU$1.07m
  • Paul Alexander (53yo)

    Deputy CFO & Company Secretary

    • Tenure: 18.9yrs
    • Compensation: AU$354.42k
  • G. Schottdorf

    Chief Executive Officer of Schottdorf Group

    • Tenure: 0yrs
    • Compensation: AU$724.87k
  • Prashan Kulasekera (47yo)

    Assistant Company Secretary

    • Tenure: 0yrs
  • Peter Savage

    Chief Business Officer

    • Tenure: 0yrs

Board Members

  • Kate Spargo (68yo)

    Non-Executive Independent Director

    • Tenure: 9.4yrs
    • Compensation: AU$240.00k
  • Chris Wilks (61yo)

    Finance Director

    • Tenure: 30yrs
    • Compensation: AU$2.46m
  • Colin Goldschmidt (65yo)

    CEO, MD & Executive Director

    • Tenure: 0yrs
    • Compensation: AU$5.54m
  • Philip Dubois (73yo)

    Executive Director

    • Tenure: 18.4yrs
    • Compensation: AU$814.00k
  • Neville Mitchell (60yo)

    Independent Non-Executive Director

    • Tenure: 2.3yrs
    • Compensation: AU$220.00k
  • Mark Compton (58yo)

    Chairman of the Board

    • Tenure: 4.1yrs
    • Compensation: AU$425.00k
  • Lou Panaccio (62yo)

    Non-Executive Independent Director

    • Tenure: 14.5yrs
    • Compensation: AU$258.00k
  • Elizabeth Wilson (60yo)

    Non-Executive Independent Director

    • Tenure: 9.4yrs
    • Compensation: AU$233.00k

Company Information

Sonic Healthcare Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Sonic Healthcare Limited
  • Ticker: SHL
  • Exchange: ASX
  • Founded: 1934
  • Industry: Health Care Services
  • Sector: Healthcare
  • Market Cap: AU$13.880b
  • Shares outstanding: 475.02m
  • Website: https://www.sonichealthcare.com

Number of Employees


Location

  • Sonic Healthcare Limited
  • Grosvenor Place
  • Level 22
  • Sydney
  • New South Wales
  • 2000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SHLASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJan 1992
SKHC.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
SABDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
SHLCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJan 1992
SKHH.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDAug 2017

Biography

Sonic Healthcare Limited, a healthcare company, provides medical diagnostic services, and administrative services and facilities to medical practitioners. The company operates through Laboratory, Imaging,  ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/12 10:33
End of Day Share Price2019/12/12 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.