Common Well being Providers, Inc. UHS, based mostly in King of Prussia, PA, at the moment presents a lovely valuation. The inventory’s ahead earnings a number of of 10.21X is notably decrease than its five-year median of 12.02X and the medical hospital industry common of 11.65X. When in comparison with different medical facility operators like Tenet Healthcare Company THC and HCA Healthcare, Inc. HCA — with ahead 12-month P/E ratios of 11.06X and 11.96X, respectively — UHS stands out as a extra inexpensive possibility. Moreover, the corporate boasts a Worth Rating of A, reinforcing its enchantment to value-focused buyers.
Picture Supply: Zacks Funding Analysis
Over the previous 12 months, Common Well being shares have gained 17.2%, considerably outpacing the trade common acquire of 4.5%. Nonetheless, the inventory has underperformed in comparison with the broader S&P 500 Index.
Inventory Value Efficiency – UHS, THC, HCA, Trade & S&P 500
Picture Supply: Zacks Funding Analysis
With the inventory buying and selling at a reduction, we study UHS’ progress drivers and challenges to find out if it presents a robust funding alternative for buyers at the moment.
Tailwinds for Common Well being Providers
The hospital administration firm continues to expertise income progress in its Acute Care Hospital Providers and Behavioral Well being Care Providers segments, pushed by rising adjusted admissions and affected person days. Adjusted admissions within the Acute Care phase grew 8.8% 12 months over 12 months in 2021, 5.7% in 2022, 6.5% in 2023, and 4% in the course of the first three quarters of 2024. Equally, adjusted affected person days within the Behavioral Well being phase elevated by 0.6% in 2021, 1.1% in 2022, 1.7% in 2023, and 1.8% within the first 9 months of 2024.
These developments underscore the rising demand for UHS companies. To handle this rising demand, the corporate strategically pursues acquisitions, which considerably contribute to its progress trajectory. The corporate’s sturdy monetary basis helps its growth efforts.
UHS generated $1.3 billion in working money stream in 2023, reflecting a 27.3% year-over-year improve. Within the first 9 months of 2024, working money stream rose by a formidable 72.8% 12 months over 12 months. Furthermore, the corporate’s long-term debt-to-capital ratio of 40.9% is considerably decrease than the trade common of 85.3%, highlighting its environment friendly monetary administration.
UHS’ strong money era additionally bolsters its efforts to boost shareholder worth. Through the first 9 months of 2024, the corporate repurchased shares price roughly $349 million. As of Sept. 30, 2024, UHS retained a remaining share repurchase capability of round $1.1 billion, demonstrating its dedication to returning worth to shareholders.
UHS Earnings Estimates & Shock Historical past
The Zacks Consensus Estimate for 2024 adjusted earnings for UHS is at the moment pegged at $15.88 per share, indicating a 50.7% year-over-year surge. The identical for 2025 signifies an additional 11.4% progress. The estimates remained secure over the previous month. The consensus estimate for 2024 and 2025 revenues suggests 9.9% and 6.1% year-over-year progress, respectively.
It beat earnings estimates in three of the previous 4 quarters and missed as soon as, with a median shock of 12.1%.
Common Well being Providers Inventory Value and EPS Shock
Universal Health Services, Inc. price-eps-surprise | Common Well being Providers, Inc. Quote
UHS Inventory: A Maintain for Now
Common Well being’s inventory, regardless of buying and selling at a reduction, won’t be the perfect alternative for brand new buyers at the moment. Whereas present shareholders can make the most of its decrease valuation, rising revenues, strong monetary efficiency and favorable estimates, potential consumers could wish to wait earlier than making a transfer.
The hospital trade as a complete is grappling with a number of challenges, together with the brand new administration’s emphasis on decreasing authorities spending and attainable coverage adjustments that might impression hospital income within the quick time period. Furthermore, uncertainties surrounding decreased hospital funding and the expiration of insurance coverage subsidies add to the sector’s issues.
A steep improve in working bills has been a serious concern for the corporate. In 2021, 2022, 2023 and the primary three quarters of 2024, the metric rose 10.6%, 9.9%, 5.7% and seven.9%, respectively, 12 months over 12 months. As useful resource utilization, salaries, wages, advantages, provide prices, and lease and rental bills proceed to develop, working prices are anticipated to rise even additional sooner or later.
Moreover, UHS’ Return on Invested Capital stands at 9.54%, nicely beneath the trade common of 12.89%. This implies that the corporate is just not producing aggressive returns on its invested capital in comparison with its friends.
So, whereas UHS reveals sturdy monetary well being and progress potential, buyers must be cautious of the headwinds talked about above. With Common Well being carrying a Zacks Rank #3 (Maintain), new buyers ought to take into account staying on the sidelines till a extra enticing entry level emerges. You’ll be able to see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Universal Health Services, Inc. (UHS) : Free Stock Analysis Report
Tenet Healthcare Corporation (THC) : Free Stock Analysis Report
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
