I totally agree that the headline EPS figure does not reflect...

I totally agree that the headline EPS figure does not reflect true earnings. My guess is that maintenance Capex is around 500K, so the EPS, if my guess was right, was understated by 20%. But this is also a big IF.

In the end, it is ROIC that matters and ONT has probably one of best I have ever seen. There is nothing wrong with greed field practices, but the problem is, according to Synstrat newsletters, it is the goodwill that matters in valuing a practice. It is harder than ever to build up goodwill right now because a glut of dentists is looking(or competing) for work. And a lot of them had no choice but to succumb to insurance companies' businesses because they have to cover their overhead and survive.

Let's say we buy a practice with 4X EBIT and the owner spent 30 years building the customer relationship and reputation and thus the good will, do we really lose because we paid 400K for 80K of pp&e? So in the end, it is a matter if ONT can keep its dentists happy and productive. I'd really like to see the CEO talking about the transition after certain practitioners retire and how ONT retain those businesses.

Right now, this is a good time to get in because there are quite a few catalysts for earnings improvement:

1. ONT made 5 acquisitions which cost 4.2m and those did not included in last year's earnings.
2. Business is obviously picking up reading between the lines in the AR.
3. It seems the scope for acquisitions is expanding after years of draught.

In investing, there are a lot of things you can do. But the most profitable are situations where you can put a high percentage of your assets in and have no possibility of losing your capital permanently while earning an adequate return. I always ask myself, do I want a special situation where I can earn 100% but only comfortable putting in 1% of assets or a situation where I can put 30% of assets and earn 20% and be able to sleep soundly at night?