Sun Healthcare Group, Inc. (NASDAQ:SUNH)

CAPS Rating: 4 out of 5

The Company is a nationwide provider, through its subsidiaries, of long-term, sub-acute and related specialty healthcare services principally to the senior population in the United States.

Recs

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Player Avatar texasfight08 (< 20) Submitted: 5/23/2009 2:01:53 AM : Outperform Start Price: $8.66 SUNH Score: -131.29

This stock has a very low P/E ratio and solid FCF. Although the annual EPS is a bit overstated due to carryforward losses (that will expire within a year or two), the P/E is still 7-8x annualized earnings.

A few other notes:

- Revenue, margin, and EPS have grown in line with management projections despite a tough environment.

- Ongoing speculation about lower medicaid rates plague this stock, but are greatly overstated.

- The only downside is a moderate to heavy debt load. However, most of the debt does not need to be rolled until 2010+.

I bought in at 8.40 and see a $14 intrinsic value without paying for any growth. Lots of upside here.

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