The Pro Medicus Ltd (ASX: PME) share price is currently higher after the company held its AGM.
Pro Medicus provides a full range of medical imaging software and services to hospitals, imaging centres and healthcare groups around the world.
Acquisitions?
The company’s cash and ‘other financial assets’ continues to grow, which enable the business to invest in developing its product suite, including AI, paying its dividends and take advantage of acquisition opportunities.
Pro Medicus said that while no acquisitions to date have met its criteria, the current circumstances surrounding the technology sector has meant the board is “starting to see valuations coming down such that an increasing number of opportunities may meet” its criteria in the future.
Dividend policy
In FY23 it grew its annual dividend by 36% to 30 cents per share, representing a dividend payout ratio of approximately 50%. The dividend was funded from the company’s internally generated cash flow.
Pro Medicus’ board expects that future dividends will continue to be fully franked.
The board will determine the appropriate level of dividends by looking at the “profitability of the business, its need for ongoing investment and the necessity to retain sufficient funds to pursue other growth opportunities.”
Growth plans
Pro Medicus said it has a plan for strong growth between FY24 to FY26.
The board and management have set “aggressive” growth targets in keeping with the company’s current and potential opportunities. It said it’s in the process of progressively implementing its plans to achieve the next growth phase.
Final thoughts on the Pro Medicus share price
Pro Medicus is probably the best business on the ASX. It has enormous profit margins, it’s growing and compounding at a fast pace, the dividend growth and balance sheet are excellent, and management seem extremely capable. And it keeps winning new contracts.
However, it’s priced for its excellence with an incredibly high price/earnings ratio (p/e ratio). Despite all of the interest rate hikes, the p/e ratio has increased over time.
It seems too expensive to buy shares today, but I’ve said that quite a few times over the years and now look where it is! If I were a shareholder, I’d be very pleased by what I’m seeing, including with this update.
