Comments on: Analyzing Amedisys (AMED) and Mulling Over More Methods http://arminfields.wordpress.com/2009/04/11/analyzing-amedisys-amed-and-mulling-over-more-methods/ Analyzing Growth Stocks for the Long-Term Mon, 14 Dec 2009 19:09:16 +0000 http://wordpress.com/ hourly 1 By: arminfields http://arminfields.wordpress.com/2009/04/11/analyzing-amedisys-amed-and-mulling-over-more-methods/#comment-155 arminfields Sat, 18 Apr 2009 02:45:37 +0000 http://arminfields.wordpress.com/?p=850#comment-155 Hey Pat: Thanks for your thoughtful comments. Why don’t you revise your SSG and lower your judgments? (That’s what I do when I get a too-high U/D.) Are you waiting for the 4-28-09 conference call? And, maybe your Forecast Low Price for the next 5 years wasn’t low enough? Have you thought about using something more severe, as a method and not just for AMED? I’m also sending this by e-mail as I never know if WordPress sends you a copy of my response (like it sends me when anyone comments). Please let me know if WordPress also sends this to you. Armin Hey Pat:

Thanks for your thoughtful comments.

Why don’t you revise your SSG and lower your judgments? (That’s what I do when I get a too-high U/D.) Are you waiting for the 4-28-09 conference call?

And, maybe your Forecast Low Price for the next 5 years wasn’t low enough? Have you thought about using something more severe, as a method and not just for AMED?

I’m also sending this by e-mail as I never know if WordPress sends you a copy of my response (like it sends me when anyone comments). Please let me know if WordPress also sends this to you.

Armin

]]> By: Pat Landers http://arminfields.wordpress.com/2009/04/11/analyzing-amedisys-amed-and-mulling-over-more-methods/#comment-154 Pat Landers Fri, 17 Apr 2009 08:57:49 +0000 http://arminfields.wordpress.com/?p=850#comment-154 Thank you Armin for reviewing my stock study on your blog. As follow up dialogue from the First Cut site shows, my study was sent to BI a day or 2 before the proposed Federal budget for 2010 was released. The proposal calls for a $37B reduction in Home Health care to Medicare patients. This could certainly have a negative affect on revenues as well as margins. As predictable, the price of the stock has gotten pushed down. Right now, no one is sure how or if the cuts will affect the Co. AMED has an investors conference call scheduled for 4-28-09. I am sure management will be able to give updated guidance then. AMED had a web-cast on 2-26-09 and guided for 15% organic growth for all of 2009. VL updated the AMED report on 3-20-09. VL raised the 3 to 5 year future high price to $95, while lowering the sales and EPS growth rates. VL predicts sales growth of 22% and EPS growth of 28% in 2009. The low end of management guidance for 2009 is sales growth of 20% and EPS growth of 25%. Yahoo finance has growth rates for 2009 similar to VL and management. It will be interesting to see if these change after the upcoming investors conference. IMO, management and analysts are fairly accurate at predicting the future 1 year out. That obviously decreases the further out you go. If growth for AMED increases at 20% in 2009, it will have to slow to 6% a year out to 2013 to get 11% annual growth-as predicted by Armin’s SSG. That seems too low to me. I have not done SSGs by predicting the low price initially until the current market volatility. This is obviously meant to be conservative and preserve the $$ I am putting into the market. It also links the stock PE with earnings growth rates-something that seems to be overlooked with BI methodology. At the time I did the study on 2-26-09, the stock was priced at around $36.50. The 52 week severe low before that was $34.75 on 12-1-08. I chose a low price in section 4 of the SSG of $26.81, which was about 27% below the current price, (at the time of the study) and 23% below the severe low price. Because the 52 week severe low was 3 months prior to the study, I felt a low price 23% below that would be safe. That judgment was too optimistic, especially after the 2010 budget was released. In the study, I recommended a Hold for the stock for the same reason Armin stated; the U:D was too high. I would wait or hold on these shares until the conference call later this month. Pat Landers Thank you Armin for reviewing my stock study on your blog. As follow up dialogue from the First Cut site shows, my study was sent to BI a day or 2 before the proposed Federal budget for 2010 was released. The proposal calls for a $37B reduction in Home Health care to Medicare patients. This could certainly have a negative affect on revenues as well as margins. As predictable, the price of the stock has gotten pushed down. Right now, no one is sure how or if the cuts will affect the Co. AMED has an investors conference call scheduled for 4-28-09. I am sure management will be able to give updated guidance then. AMED had a web-cast on 2-26-09 and guided for 15% organic growth for all of 2009.

VL updated the AMED report on 3-20-09. VL raised the 3 to 5 year future high price to $95, while lowering the sales and EPS growth rates. VL predicts sales growth of 22% and EPS growth of 28% in 2009. The low end of management guidance for 2009 is sales growth of 20% and EPS growth of 25%. Yahoo finance has growth rates for 2009 similar to VL and management. It will be interesting to see if these change after the upcoming investors conference. IMO, management and analysts are fairly accurate at predicting the future 1 year out. That obviously decreases the further out you go. If growth for AMED increases at 20% in 2009, it will have to slow to 6% a year out to 2013 to get 11% annual growth-as predicted by Armin’s SSG. That seems too low to me.

I have not done SSGs by predicting the low price initially until the current market volatility. This is obviously meant to be conservative and preserve the $$ I am putting into the market. It also links the stock PE with earnings growth rates-something that seems to be overlooked with BI methodology. At the time I did the study on 2-26-09, the stock was priced at around $36.50. The 52 week severe low before that was $34.75 on 12-1-08. I chose a low price in section 4 of the SSG of $26.81, which was about 27% below the current price, (at the time of the study) and 23% below the severe low price. Because the 52 week severe low was 3 months prior to the study, I felt a low price 23% below that would be safe. That judgment was too optimistic, especially after the 2010 budget was released.

In the study, I recommended a Hold for the stock for the same reason Armin stated; the U:D was too high. I would wait or hold on these shares until the conference call later this month.

Pat Landers

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