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MOH - Molina Healthcare Inc


Sionnach
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Molina Healthcare - Midcap healthcare provider being overshadowed by the big 3 (post mergers)

 

Seems like an absolute no brainer. Wanted to see if anyone had any thoughts and any answer to what I am missing.

 

EV/EBITDA = 0.7 (seriously), EV/EBIT=1.2

 

Basically MOH is trading at $53 has $44/sh in net cash. So you're getting a business for $9 per share that is expected to earn $5/sh in FCF next year. Meaning one year out you have a stock at $53 with $49 in cash.

 

The business has sticky customers and is growing.

 

The street is saying its 15x est. P/E so its fairly valued. Its giving no value to cash, potentially because its majority owned.

 

I do not understand how this is possible.

 

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Not sure I understand why that would matter as long as it continues as a going concern. They don't need to hold cash on the balance sheet greater than accounts payable. Accounts payable has increased every year so its actually producing cash not consuming it

 

Most of the cash on their balance sheet is undoubtedly excess cash not operating cash. They could pay out most of it in the form of a special dividend and the business would not fall apart

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