The Pro Medicus Limited (ASX: PME) share price keeps going up and up, will it ever stop?
Pro Medicus is a Melbourne-based software owner and developer, licensing products to large US hospitals and Australian radiology clinics. The company has offices in Richmond, Victoria, Berlin, Germany and in the United States.
The Pro Medicus Share Price Continues To Rise
In early trading the Pro Medicus share price is up another 1.65%. Yesterday the Pro Medicus share price increased by 5%. In 2019 the Pro Medicus share price has just about doubled. It’s gone on a great run so far this year.
Some of the share price run-up is certainly justified with a number of positive announcements in FY19. It won a 7-year deal worth $27 million with Partners Healthcare in the US, it won a $3 million contract extension with a German Government Hospital network and it won a 7-year contract with Duke Health, which is the largest health system in the state of North Carolina.
Obviously, the key to generating returns for shareholders is profit growth. In the recent half year result the healthcare business announced that revenue increased by 59.4% to $25.3 million, underlying profit after tax grew by 79.9% to $9.2 million and reported profit after tax increased by 184.3% to $9.1 million.
Its EBIT margin (click here to learn what EBIT means) increased from 48.5% to 51.8%, which is a great improvement and speaks of the growing profitability of the business.
I also like that Pro Medicus was debt free at the end of December 2018 and had $24.7 million cash.
Is Pro Medicus A Buy Today?
According to Commsec estimates, Pro Medicus is valued at 133 times the 2020 financial year’s estimated earnings.
Pro Medicus has an excellent future, but it has a price to match. Most of the best ASX growth shares are trading expensively. Even so, I would rather buy shares of Altium which is valued 45 times the 2020 financial year’s estimated earnings.
Currently I would rather buy one of the reliable shares in the free report below instead of Pro Medicus at a much more attractive value.
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Disclosure: Jaz owns shares of Altium at the time of writing, but this could change at any time.
