Stock Analysis: Owens & Minor, Inc. (OMI)

Owens & Minor Inc. is a leading domestic distributor of medical and surgical supplies to the acute care market, a health care supply chain management company, and a direct-to-consumer (DTC) supplier of testing and monitoring supplies for diabetes.

OMI should see increasing demand for its medical/surgical supplies based on our aging society. The company has been focused on developing new services and cost control. OMI expects its new third-party logistics business to achieve break-even by year-end 2010 and its ambulatory surgery center initiative should start contributing to operating earnings in 2011. Long-term health care reform should eventually lead to higher utilization of hospitals. Although OMI is trading below my buy price of $33.91, its erratic cash flows, including negative free cash flow in 3 of the last 10 years, will keep me on the sideline.

Source: Dividends Value


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