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Friday, 12 September 2003
September 12, 2003 Hanger Orthopedic Group (HGR)
I am ready for the market to wrap up for the week! But before it does, I have found one more stock worth considering: Hanger Orthopedic Group (HGR). This NYSE issue, according to money.cnn.com, "...acquires and operates the practices of orthotists and prosthetists. HGR also manufactures & distributes custom-made and prefabricated O&P products." HGR is having a nice day today, trading, as I write, at $14.75, up $.65 or 4.61%.

On July 29, 2003, HGR reported their second quarter results for the three-month period ending June 30, 2003: Net sales for the quarter increased by $5.8 million or 4.4%, to $138.9 million from $133.1 million last year. Net income for the second quarter was $9.4 million or $.35/diluted share compared to $7.7 million or $.29/diluted share last year.

Morningstar.com shows a steady, if not awe-inspiring, increase in revenue from $188 million in 1998 to $347 million in 1999, $486 million in 2000, $508 million in 2001, and $526 million in 2002.

Free cash flow has been relatively steady with $(6) million in 2000, $44 million in 2001, $38 million in 2002 and $44 million in the trailing twelve months.

This company, like the previous on posted, has significant long-term debt: $13.7 million in cash, $173.6 million in other current assets vs. $47.7 million in current liabilities and $486.5 million in long-term liabilities. With the free cash flow holding steady, the presence of long term debt should not be significant.

Looking on Yahoo.com, we find this company with a reasonable (!) trailing p/e of 10.76. The market cap is a 'smallish' $306.60 million with a PEG ratio of 0.82. No dividend is paid. There are 607,000 shares out short representing 3.00% of the holders.

This is indeed an interesting story especially with the very reasonable valuation and steady growth. Personally, I would rather stick with companies with FASTER revenue growth..and would pay a premium in p/e for this. Also, I would be happier if the debt was a little lower. Anyhow, with the downright cheap valuation, this stock may very well be an excellent choice in here.

Bob


Posted by bobsadviceforstocks at 2:14 PM CDT | Post Comment | Permalink

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