Concord Medical Services Has All The Metrics Of A Value Stock

MicroValue profile picture

Concord Medical Services (NYSE:CCM) is almost a classic deep value stock. Let me give you the rundown, then get to the 'almost.'

CCM stock IPO'ed at eleven dollars on the NYSE in December 2009. Since IPO, the company has dropped to three dollars and change, despite slowly but surely executing its intended business plan to operate a network of radiotherapy and diagnostic imaging centers (and soon to be hospitals).

Basically, CCM leases expensive medical equipment and provides management services to its hospital partners. From its 20-F:

... we receive a contracted percentage of each center’s revenue net of specified operating expenses. Each center is located on the premises of our hospital partners and is typically equipped with a primary unit of advanced radiotherapy or diagnostic imaging equipment, such as a linear accelerator, head gamma knife system, body gamma knife system, positron emission tomography-computed tomography scanner, or PET-CT scanner, or magnetic resonance imaging scanner, or MRI scanner. We provide clinical support services to doctors who work in the centers in our network, which include developing treatment protocols for doctors and organizing joint diagnosis between doctors in our network and clinical research. In addition, we help recruit and determine the compensation of doctors and other medical personnel in our network and are typically in charge of most of the non-clinical aspects of the centers’ daily operations, including marketing, training and administrative duties. Our hospital partners are responsible for the centers’ clinical activities, the medical decisions made by doctors, and the employment of the doctors in accordance with regulations.

With a PE of just over 7, a forward PE of just over 6, and a price to book of < 0.5, the stock has all the metrics of a value stock. What's more, the company just paid a 0.19 special dividend and approved a $20 million share buyback -- at current prices that

This article was written by

MicroValue profile picture
I am a conservative investor focused on value stocks, exchange-traded debt, and closed-end mutual funds. I worked for 14 years for a fund that invested primarily in closed-end mutual funds, BDCs, and mortgage REITs. I also have 20 years of experience investing in smallcap and microcap stocks. I am a CFA charterholder and teach at Westminster College.

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