August 2, 2017

On Wednesday the S&P 500 was up close to unchanged while Toronto was up 0.4%.

The Dow Jones Industrial Average breached the 22,000 point mark.

CRH Medical was up about 11% after announcing an acquisition and forecasting more acquisitions. It then releases earnings after the close. The earnings release seemed to be generally positive  Revenues was up strongly. Adjusted EBITDA attributable to share owners was up 4%. But actual bottom line earnings per share were slightly below zero. That may have been due to an unusual expense to pay off early some high cost debt. This is not great results but considering the huge drop in the share price the results seem positive and may suggest that the price drop was overdone. The company will justifiably face some criticism of its disclosure. It focuses too much on EBITDA and seems to ignore bottom line earnings. I believe the net earnings would be positive after making legitimate adjustments for amortization of purchased customer relationships (which is not likely a wasting asset) and for the unusual interest penalty paid. The company will host a conference call Thursday morning. It remains to seen whether the market will focus on the negative aspects of the report or the positive aspects. In part, this depends on how key analysts view the results. At this time I continue to believe that the shares represent good value but I also view the shares as somewhat speculative.

Constellation Software was up 3.6%. I am in the process of updating my analysis and I expect to rate the shares probably (lower) Buy. This likely remains a good long term investment but I am not much inclined to add to my position at this price.