Valens Equities Weekly Equity Idea Highlight for October 26, 2016 – Computer Programs & Systems Inc.
This week the Valens Securities team highlights our most interesting equity insight from across our tools and our analysis.
Computer Programs & Systems Inc. (CPSI): Market expectations for weakness in ROA’ and growth and post-acquisition credit risk appear exaggerated, indicating that near-term integration issues may present a buying opportunity
CPSI is trading at the lower end of historical valuations in terms of V/A’, with V/A’ at 5.3x. On the other hand, V/E’ is at the higher end of recent valuations at 22.2x. At current valuations, the market is expecting that ROA’ will not rebound after the acquisition of Healthland, but instead will remain at the low end of historical levels at 28%, with modest 5% Asset’ growth.