A Warren Buffett Type Stock: MWIV


It’s hard to find needles in so many haystacks when it comes to picking stocks for secure ROIC (ROIC = Net operating profit after taxes / Invested capital). Warren Buffett has been doing it for years and many wish they also had the foresight to be able to invest like Berkshire Hathaway’s CEO. So when screening for stocks and you find the following:

  • Return on equity greater than 15%
  • Debt to equity ratio less than 50%
  • Steady or improving net and gross margins over the past two or three years
  • Proprietary valuation model that predicts at least a 10% upside
  • No SEC inquiries or accounting issues
  • Not involved in a merger or acquisition

It’s a pretty clear case for a safe investment based on ROIC. ROIC is the most important measurement when it comes to value investments. By calculating a company’s ROIC, shareholders can see how well it’s using the cash and if it’s creating value for investors. ROIC divides a company’s operating profit by how much investment it took to get the operating profit.

MWIV completed an acquisition of Micro Beef Technologies, Ltd. on October 31 for $60 million which should benefit their already growing ROIC for fiscal year end September 30,2012. Micro Beef Technologies, Ltd. is a value-added distributor to the production animal market, including the distribution of micro feed ingredients, pharmaceuticals, vaccines, parasiticides, supplies, and other animal health products.

MWI Veterinary Supply’s ROIC has steadily increased over the last 5 years. Companies with consistently high ROIC show they’re efficiently using investor capital. These companies also have the ability to treat their shareholders well since the company can use their extra cash to pay out dividends, buy back shares, or further invest into their franchise for growth. These are companies that Warren Buffett has long loved.

MWI Veterinary Supply, Inc. (NASDAQ: MWIV)

Current Company Snapshot:

Price: 66.92
1y Target Est: 83.33
Day’s Range: 66.14 – 68.04
52wk Range: 59.95 – 90.24
Avg Vol (3m): 72,719
Short Interest: 1,060,000 (as of December 15, 2011)
Market Cap: 851.02M
P/E (ttm): 19.68
EPS (ttm): 3.40

MWIV was upgraded by analysts at CL King from a “buy” rating to a “strong buy” rating.

7% of Shares Held by All Insider and 5% Owners
93% of Shares Held by Institutional & Mutual Fund Owners
100% of Float Held by Institutional & Mutual Fund Owners
140 Institutions Holding Shares

Valuation Measures

Market Cap (intraday)5: 852.10M
Enterprise Value (Dec 28, 2011)3: 856.01M
Trailing P/E (ttm, intraday): 19.71
Forward P/E (fye Sep 30, 2013)1: 15.73
PEG Ratio (5 yr expected)1: 1.11
Price/Sales (ttm): 0.54
Price/Book (mrq): 2.89
Enterprise Value/Revenue (ttm)3: 0.55
Enterprise Value/EBITDA (ttm)6: 11.29

Financial Highlights

Fiscal Year

Fiscal Year Ends: Sep 30
Most Recent Quarter (mrq): Sep 30, 2011


Profit Margin (ttm): 2.72%
Operating Margin (ttm): 4.44%

Management Effectiveness

Return on Assets (ttm): 8.94%
Return on Equity (ttm): 15.78%

Income Statement

Revenue (ttm): 1.57B
Revenue Per Share (ttm): 125.59
Qtrly Revenue Growth (yoy): 17.40%
Gross Profit (ttm): 205.58M
EBITDA (ttm)6: 75.81M
Net Income Avl to Common (ttm): 42.58M
Diluted EPS (ttm): 3.40
Qtrly Earnings Growth (yoy): 14.00%

Balance Sheet

Total Cash (mrq): 606.00K
Total Cash Per Share (mrq): 0.05
Total Debt (mrq): 4.17M
Total Debt/Equity (mrq): 1.42
Current Ratio (mrq): 1.96
Book Value Per Share (mrq): 23.21

Cash Flow Statement

Operating Cash Flow (ttm): 32.43M
Levered Free Cash Flow (ttm): 15.80M

Chart Analysis

MWI Veterinary Supply, Inc. (NASDAQ: MWIV) 3 Year Chart

MWI Veterinary Supply, Inc. (NASDAQ: MWIV) price in the stock market today currently is $66.92. MWIV is currently trading -1.06% below its 50 day moving average and -8.86% below its 200 day moving average. MWIV is currently -25.84% below its 52-week high of $90.24 and 11.63% above its 52-week low of $59.95. MWIV‘s PE ratio is currently 19.68 and its market cap is currently $851.02M.

Financial Data Source: Yahoo Finance

About MWI Veterinary Supply

MWI Veterinary Supply, Inc. (NASDAQ: MWIV) is one of the largest veterinary distributors in the U.S. selling to licensed veterinarians. MWIV is focused to be the best resource for the veterinary profession by delivering superior value, efficiency and innovation. MWIV primarily offers pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, supplies, specialty products, veterinary pet food, and nutritional products. MWIV’s pharmaceutical products include anesthetics, analgesics, antibiotics, ophthalmics, and hormones; vaccine products consist of small animal, equine, and production animal biologicals; and parasiticides are used for control of fleas, ticks, flies, mosquitoes, and internal parasites. MWIV’s diagnostics products comprise consumable in-clinic tests for detecting heartworm, lyme, feline leukemia, and parvovirus, as well as consumable products for measuring blood chemistry, electrolyte balance, and cell counts; capital equipment products include anesthesia machines, surgical monitors, diagnostic equipment, dental machines, cages, lights, and x-ray machines; and supplies consists of syringes, instruments, bandages, IV products, surgical consumables, grooming materials, and other small equipment items. MWIV’s veterinary pet foods products include foods for specialty diets and premium pet foods; and nutritional products comprise dietary supplements, vitamins, dental chews, and specialty treats. As of September 30, 2011, MWIV served approximately 24,000 veterinary practices in the United States; and 1,500 veterinary practices in the United Kingdom.

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