CorVel continues to intrigue. After my last post/prognostication about the potential for CorVel to be on Coventry’s acquisitions-we’re-thinking-about list, trading volume jumped by 40%. I’m not claiming a causal relationship, just a statistical one.
Since then, the average volume has been six times what it was earlier in the year. The stock price itself has seen a similar trajectory, with CorVel now trading close to $60 a share, almost four times its 52 week low.
Earnings have not appreciated nearly as much, resulting in a P/E ratio within a whisper of 40. (Exxon’s PE is 11…)
This normally happens when a major new product, new customer, or new strategic relationship is near, or if investors all of a sudden decide the industry is the newest, hottest thing going. I doubt it’s the latter; workers’ comp managed care has been one of the more boring businesses for years. Yes, there is potential here, but one would have to be highly optimistic to think CorVel is the mechanism to unlock the hidden wealth in work comp.
Perhaps it isn’t puzzling that in this environment CEO Gordon Clemons has been selling his stock (he’s dropped almost 70,000 shares into the market in the last three weeks).
Maybe it’s the company’s impending stock split.
Joe look at Corvel’s balance sheet very attractive to buyer. Earnings trends are neg however.
Joe do not under estimate what ethics and transparancy will do to our industry. up for grabs!