HCA Healthcare Inc Valuation – February 2019 $HCA

Company Profile (excerpt from Reuters): HCA Healthcare, Inc., formerly HCA Holdings, Inc., incorporated on October 19, 2010, is a holding company. The Company, through its subsidiaries, owns and operates hospitals and related healthcare entities. As of December 31, 2016, the Company operated in two geographically organized groups, including the National and American Groups. As of December 31, 2016, the National Group included 84 hospitals, which were located in Alaska, California, Florida, southern Georgia, Idaho, Indiana, northern Kentucky, Nevada, New Hampshire, South Carolina, Utah and Virginia. As of December 31, 2016, the American Group included 80 hospitals, which were located in Colorado, northern Georgia, Kansas, southern Kentucky, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee and Texas. As of December 31, 2016, the Company operated six hospitals in England.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HCA – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $48,101,661,954 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.35 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 136.01% Pass
6. Moderate PEmg Ratio PEmg < 20 16.19 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -16.89 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.35 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 12.12 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.63
MG Growth Estimate 15.00%
MG Value $332.20
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $125.12
MG Value based on 0% Growth $73.34
Market Implied Growth Rate 3.84%
Current Price $139.66
% of Intrinsic Value 42.04%

HCA Healthcare Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.24 in 2015 to an estimated $8.63 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.84% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into HCA Healthcare Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.4 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 16.19, which was below the industry average of 51.18, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-90.43.

HCA Healthcare Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$90.43
Graham Number $0.00
PEmg 16.19
Current Ratio 1.35
PB Ratio -16.89
Current Dividend $1.40
Dividend Yield 1.00%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $10,213,000,000
Total Current Liabilities $7,569,000,000
Long-Term Debt $32,033,000,000
Total Assets $39,207,000,000
Intangible Assets $7,953,000,000
Total Liabilities $42,125,000,000
Shares Outstanding (Diluted Average) 352,876,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.87
Dec2018 $10.66
Dec2017 $5.95
Dec2016 $7.30
Dec2015 $4.99
Dec2014 $4.16
Dec2013 $3.37
Dec2012 $3.49
Dec2011 $4.97
Dec2010 $2.76
Dec2009 $2.44
Dec2008 $0.00
Dec2007 $0.00
Dec2006 $0.00
Dec2005 $3.19
Dec2004 $2.58
Dec2003 $2.61
Dec2002 $1.59
Dec2001 $1.65
Dec2000 $0.39
Dec1999 $1.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.63
Dec2018 $7.54
Dec2017 $5.71
Dec2016 $5.28
Dec2015 $4.24
Dec2014 $3.83
Dec2013 $3.58
Dec2012 $3.37
Dec2011 $2.88
Dec2010 $1.57
Dec2009 $1.03
Dec2008 $0.60
Dec2007 $1.16
Dec2006 $1.82
Dec2005 $2.60
Dec2004 $2.12
Dec2003 $1.75

Recommended Reading:

Other ModernGraham posts about the company

HCA Healthcare Inc Valuation – April 2018 $HCA
HCA Holdings Inc Valuation – August 2016 $HCA
HCA Holdings Inc. Analysis – Initial Coverage $HCA

Other ModernGraham posts about related companies

Stryker Corp Valuation – February 2019 $SYK
Align Technology Inc Valuation – February 2019 $ALGN
Quest Diagnostics Inc Valuation – February 2019 $DGX
AmerisourceBergen Corp Valuation – February 2019 $ABC
Abiomed Inc Valuation – February 2019 $ABMD
Laboratory Corp of America Holdings Inc Valuation – January 2019 $LH
Intuitive Surgical Inc Valuation – January 2019 $ISRG
PerkinElmer Inc Valuation – January 2019 $PKI
Cardinal Health Inc Valuation – January 2019 $CAH
Varian Medical Systems Inc Valuation – January 2019 $VAR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tenet Healthcare Corp Valuation – June 2018 $THC

Company Profile (excerpt from Reuters): Tenet Healthcare Corporation (Tenet), incorporated on November 7, 1975, is a healthcare services company. The Company operates regionally focused, integrated healthcare delivery networks in large urban and suburban markets in the United States. The Company operates through three segments: Hospital Operations and Other, Ambulatory Care and Conifer. As of December 31, 2017, the Company operated 76 hospitals, 20 short-stay surgical hospitals, over 470 outpatient centers, and nine facilities in the United Kingdom through its subsidiaries, partnerships and joint ventures, including USPI Holding Company, Inc. (USPI joint venture). In addition, the Company’s subsidiary, Conifer Holdings, Inc. (Conifer), provides healthcare business process services in the areas of hospital and physician revenue cycle management and value-based care solutions to healthcare systems, as well as individual hospitals, physician practices, self-insured organizations, health plans and other entities.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of THC – June 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,396,149,135 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.24 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -179.25% Fail
6. Moderate PEmg Ratio PEmg < 20 -15.77 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.35 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.24 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 13.26 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$2.13
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$30.88
MG Value based on 0% Growth -$18.10
Market Implied Growth Rate -12.13%
Current Price $33.57
% of Intrinsic Value N/A

Tenet Healthcare Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.56 in 2014 to an estimated $-2.13 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tenet Healthcare Corp revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -15.77, which was below the industry average of 46.81, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-146.04.

Tenet Healthcare Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$146.04
Graham Number $0.00
PEmg -15.77
Current Ratio 1.24
PB Ratio 1.35
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $5,634,000,000
Total Current Liabilities $4,561,000,000
Long-Term Debt $14,223,000,000
Total Assets $23,184,000,000
Intangible Assets $8,828,000,000
Total Liabilities $20,626,000,000
Shares Outstanding (Diluted Average) 102,656,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.91
Dec2017 -$7.00
Dec2016 -$1.93
Dec2015 -$1.41
Dec2014 $0.12
Dec2013 -$1.32
Dec2012 $1.30
Dec2011 $0.48
Dec2010 $8.16
Dec2009 $1.48
Dec2008 $0.20
Dec2007 -$0.76
Dec2006 -$6.84
Dec2005 -$6.16
Dec2004 -$24.08
Dec2003 -$9.60
May2002 $6.24
May2001 $5.25
May2000 $2.56
May1999 $2.11
May1998 $3.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.13
Dec2017 -$3.20
Dec2016 -$1.08
Dec2015 -$0.50
Dec2014 $0.56
Dec2013 $1.19
Dec2012 $2.40
Dec2011 $2.61
Dec2010 $2.60
Dec2009 -$0.93
Dec2008 -$3.93
Dec2007 -$7.16
Dec2006 -$9.60
Dec2005 -$9.21
Dec2004 -$8.47
Dec2003 $0.00
May2002 $4.49

Recommended Reading:

Other ModernGraham posts about the company

Tenet Healthcare Corp Valuation – July 2016 $THC
30 Companies in the Spotlight This Week – 5/23/15
Tenet Healthcare Corporation Annual Valuation – 2015 $THC
16 Companies in the Spotlight This Week – 5/24/14
Tenet Healthcare Corp 2014 Annual Valuation $THC

Other ModernGraham posts about related companies

Dentsply Sirona Inc Valuation – June 2018 $XRAY
IDEXX Laboratories Inc Valuation – June 2018 $IDXX
Hologic Inc Valuation – June 2018 $HOLX
Mettler-Toledo International Inc Valuation – June 2018 $MTD
Envision Healthcare Corp Valuation – June 2018 $EVHC
DaVita Inc Valuation – June 2018 $DVA
Danaher Corp Valuation – May 2018 $DHR
Agilent Technologies Inc Valuation – May 2018 $A
Cooper Companies Inc Valuation – May 2018 $COO
Edwards Lifesciences Corp Valuation – May 2018 $EW

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Envision Healthcare Corp Valuation – June 2018 $EVHC

Company Profile (excerpt from Reuters): Envision Healthcare Corporation, incorporated on June 10, 2016, is a provider of healthcare services. The Company offers an array of clinical solutions, including physician-led services, ambulatory services and post-acute services. The Company operates through two segments: physician services and ambulatory services. The physician services segment includes the Company’s hospital-based and non-hospital-based physician services business. The ambulatory services segment includes the Company’s ambulatory surgery business, which acquires, develops, owns and operates ambulatory surgery centers (ASCs) and surgical hospitals in partnership with physicians and health systems. As of March 31, 2017, the Company had physician services contracts covering more than 1,600 clinical departments at healthcare facilities in 45 states and the District of Columbia, and owned and operated 264 ASCs in 35 states and the District of Columbia.

EVHC Chart

EVHC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EVHC – June 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,160,068,300 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.27 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -78.62% Fail
6. Moderate PEmg Ratio PEmg < 20 41.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.75 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.27 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.26 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.05
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $15.19
MG Value based on 0% Growth $8.90
Market Implied Growth Rate 16.38%
Current Price $43.21
% of Intrinsic Value N/A

Envision Healthcare Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.74 in 2014 to an estimated $1.05 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.38% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Envision Healthcare Corporation revealed the company was trading below its Graham Number of $64.98. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 41.26, which was below the industry average of 46.81, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-38.91.

Envision Healthcare Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$38.91
Graham Number $64.98
PEmg 41.26
Current Ratio 2.27
PB Ratio 0.75
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $2,534,000,000
Total Current Liabilities $1,118,300,000
Long-Term Debt $4,608,500,000
Total Assets $14,384,500,000
Intangible Assets $11,228,400,000
Total Liabilities $7,295,000,000
Shares Outstanding (Diluted Average) 122,354,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.48
Dec2017 -$1.96
Dec2016 -$0.47
Dec2015 $3.16
Dec2014 $1.24
Dec2013 $2.28
Dec2012 $1.98
Dec2011 $1.60
Dec2010 $1.62
Dec2009 $1.69
Dec2008 $1.47
Dec2007 $1.42
Dec2006 $1.24
Dec2005 $1.17
Dec2004 $1.30
Dec2003 $0.98
Dec2002 $0.77
Dec2001 $0.52
Dec2000 $0.40
Dec1999 $0.31
Dec1998 $0.04

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.05
Dec2017 $0.17
Dec2016 $1.37
Dec2015 $2.21
Dec2014 $1.74
Dec2013 $1.94
Dec2012 $1.73
Dec2011 $1.59
Dec2010 $1.56
Dec2009 $1.48
Dec2008 $1.36
Dec2007 $1.28
Dec2006 $1.17
Dec2005 $1.07
Dec2004 $0.94
Dec2003 $0.71
Dec2002 $0.52

Recommended Reading:

Other ModernGraham posts about the company

Envision Healthcare Corp Valuation – Initial Coverage $EVHC

Other ModernGraham posts about related companies

DaVita Inc Valuation – June 2018 $DVA
Danaher Corp Valuation – May 2018 $DHR
Agilent Technologies Inc Valuation – May 2018 $A
Cooper Companies Inc Valuation – May 2018 $COO
Edwards Lifesciences Corp Valuation – May 2018 $EW
Baxter International Inc Valuation – May 2018 $BAX
Boston Scientific Corp Valuation – May 2018 $BSX
Centene Corp Valuation – May 2018 $CNC
Abbott Laboratories Valuation – May 2018 $ABT
Becton Dickinson and Co Valuation – May 2018 $BDX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

HCA Healthcare Inc Valuation – April 2018 $HCA

Company Profile (excerpt from Reuters): HCA Healthcare, Inc., formerly HCA Holdings, Inc., incorporated on October 19, 2010, is a holding company. The Company, through its subsidiaries, owns and operates hospitals and related healthcare entities. As of December 31, 2016, the Company operated in two geographically organized groups, including the National and American Groups. As of December 31, 2016, the National Group included 84 hospitals, which were located in Alaska, California, Florida, southern Georgia, Idaho, Indiana, northern Kentucky, Nevada, New Hampshire, South Carolina, Utah and Virginia. As of December 31, 2016, the American Group included 80 hospitals, which were located in Colorado, northern Georgia, Kansas, southern Kentucky, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee and Texas. As of December 31, 2016, the Company operated six hospitals in England.

HCA Chart

HCA data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HCA – April 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $34,034,784,754 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.62 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 95.38% Pass
6. Moderate PEmg Ratio PEmg < 20 15.60 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -5.17 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.62 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.60 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.20
MG Growth Estimate 9.27%
MG Value $167.49
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $89.84
MG Value based on 0% Growth $52.67
Market Implied Growth Rate 3.55%
Current Price $96.63
% of Intrinsic Value 57.69%

HCA Healthcare Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.83 in 2014 to an estimated $6.2 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.55% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into HCA Healthcare Inc revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 15.6, which was below the industry average of 44.81, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-91.86.

HCA Healthcare Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$91.86
Graham Number $0.00
PEmg 15.60
Current Ratio 1.62
PB Ratio -5.17
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $9,977,000,000
Total Current Liabilities $6,158,000,000
Long-Term Debt $32,858,000,000
Total Assets $36,593,000,000
Intangible Assets $7,394,000,000
Total Liabilities $43,399,000,000
Shares Outstanding (Diluted Average) 363,845,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.62
Dec2017 $5.95
Dec2016 $7.30
Dec2015 $4.99
Dec2014 $4.16
Dec2013 $3.37
Dec2012 $3.49
Dec2011 $4.97
Dec2010 $2.76
Dec2009 $2.44
Dec2008 $0.00
Dec2007 $0.00
Dec2006 $0.00
Dec2005 $3.19
Dec2004 $2.58
Dec2003 $2.61
Dec2002 $1.59
Dec2001 $1.65
Dec2000 $0.39
Dec1999 $1.11
Dec1998 $0.73

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.20
Dec2017 $5.71
Dec2016 $5.28
Dec2015 $4.24
Dec2014 $3.83
Dec2013 $3.58
Dec2012 $3.37
Dec2011 $2.88
Dec2010 $1.57
Dec2009 $1.03
Dec2008 $0.60
Dec2007 $1.16
Dec2006 $1.82
Dec2005 $2.60
Dec2004 $2.12
Dec2003 $1.75
Dec2002 $1.24

Recommended Reading:

Other ModernGraham posts about the company

HCA Holdings Inc. Analysis – Initial Coverage $HCA

Other ModernGraham posts about related companies

Express Scripts Holding Co Valuation – April 2018 $ESRX
Stryker Corp Valuation – April 2018 $SYK
Cerner Corporation Valuation – April 2018 $CERN
Quest Diagnostics Inc Valuation – April 2018 $DGX
Laboratory Corporation of America Holdings Valuation – March 2018 $LH
Intuitive Surgical Inc valuation – March 2018 $ISRG
PerkinElmer Inc Valuation – March 2018 $PKI
Cardinal Health Inc Valuation – March 2018 $CAH
Varian Medical Systems Inc Valuation – March 2018 $VAR
Zimmer Biomet Holdings Inc Valuation – March 2018 $ZBH

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Envision Healthcare Corp Valuation – Initial Coverage $EVHC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Envision Healthcare Corp (EVHC) fares in the ModernGraham valuation model.

EVHC Chart

EVHC data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

Learn More About Premium Membership

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of EVHC – March 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,949,568,400 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.09 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 50.00% Pass
6. Moderate PEmg Ratio PEmg < 20 29.22 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.59 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.09 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.61 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $2.32
MG Growth Estimate 2.95%
MG Value $33.36
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $33.60
MG Value based on 0% Growth $19.70
Market Implied Growth Rate 10.36%
Current Price $67.71
% of Intrinsic Value 202.96%

Envision Healthcare Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.94 in 2013 to an estimated $2.32 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Envision Healthcare Corporation revealed the company was trading below its Graham Number of $107.24. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 29.22, which was below the industry average of 32.29, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-128.24.

Envision Healthcare Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$128.24
Graham Number $107.24
PEmg 29.22
Current Ratio 2.09
PB Ratio 0.59
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $2,411,300,000
Total Current Liabilities $1,154,300,000
Long-Term Debt $5,791,600,000
Total Assets $16,708,900,000
Intangible Assets $13,423,900,000
Total Liabilities $9,977,800,000
Shares Outstanding (Diluted Average) 59,002,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.48
Dec2016 -$0.47
Dec2015 $3.16
Dec2014 $1.24
Dec2013 $2.28
Dec2012 $1.98
Dec2011 $1.60
Dec2010 $1.62
Dec2009 $1.69
Dec2008 $1.47
Dec2007 $1.42
Dec2006 $1.24
Dec2005 $1.17
Dec2004 $1.30
Dec2003 $0.98
Dec2002 $0.77
Dec2001 $0.52
Dec2000 $0.40
Dec1999 $0.31
Dec1998 $0.04
Dec1997 -$0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.32
Dec2016 $1.37
Dec2015 $2.21
Dec2014 $1.74
Dec2013 $1.94
Dec2012 $1.73
Dec2011 $1.59
Dec2010 $1.56
Dec2009 $1.48
Dec2008 $1.36
Dec2007 $1.28
Dec2006 $1.17
Dec2005 $1.07
Dec2004 $0.94
Dec2003 $0.71
Dec2002 $0.52
Dec2001 $0.35

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

UnitedHealth Group Inc Valuation – February 2017 $UNH
Davita Inc Valuation – February 2017 $DVA
Steris PLC Valuation – Initial Coverage $STE
Danaher Corporation Valuation – February 2017 $DHR
Cryolife Inc Valuation – Initial Coverage $CRY
CorVel Corp Valuation – Initial Coverage $CRVL
Charles River Laboratories Intl Inc Valuation – Initial Coverage $CRL
Kindred Healthcare Inc Valuation – Initial Coverage $KND
SurModics Inc Valuation – Initial Coverage $SRDX
Agilent Technologies Inc Valuation – February 2017 $A

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Kindred Healthcare Inc Valuation – Initial Coverage $KND

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Kindred Healthcare Inc (KND) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Kindred Healthcare, Inc. is a healthcare services company. The Company operates through four divisions, including the hospital division, the Kindred at Home division, the Kindred Rehabilitation Services division and the nursing center division. Its divisions represent over six segments, including hospitals, home health services, hospice services, Kindred Hospital Rehabilitation Services, RehabCare and nursing centers. The Company’s hospital division provides long-term acute care services through the operation of a national network of approximately 95 transitional care (TC) hospitals. Its Kindred at Home division provides home health, hospice, and community care services. Its Kindred Rehabilitation Services division operates inpatient rehabilitation hospitals (IRFs) and acute rehabilitation units (ARUs), and provides rehabilitation services. Its nursing center division provides care through the operation of a national network of approximately 90 nursing centers.

KND Chart

KND data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

Learn More About Premium Membership

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of KND – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $572,672,589 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.61 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -1393.51% Fail
6. Moderate PEmg Ratio PEmg < 20 -1.92 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.71 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.61 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.33 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$3.55
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$51.44
MG Value based on 0% Growth -$30.15
Market Implied Growth Rate -5.21%
Current Price $6.82
% of Intrinsic Value N/A

Kindred Healthcare, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-0.09 in 2012 to an estimated $-3.55 for 2016. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Kindred Healthcare, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.48 per share, for a yield of 7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -1.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-43.22.

Kindred Healthcare, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$43.22
Graham Number $0.00
PEmg -1.92
Current Ratio 1.61
PB Ratio 0.71
Current Dividend $0.48
Dividend Yield 7.04%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $1,643,875,000
Total Current Liabilities $1,021,344,000
Long-Term Debt $3,316,174,000
Total Assets $6,227,340,000
Intangible Assets $3,227,075,000
Total Liabilities $5,398,349,000
Shares Outstanding (Diluted Average) 86,869,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$7.49
Dec2015 -$1.11
Dec2014 -$1.36
Dec2013 -$3.23
Dec2012 -$0.78
Dec2011 -$1.16
Dec2010 $1.43
Dec2009 $1.02
Dec2008 $0.92
Dec2007 -$1.17
Dec2006 $1.92
Dec2005 $3.20
Dec2004 $1.67
Dec2003 -$2.15
Dec2002 $0.97
Dec2001 $8.28
Dec2000 -$0.94
Dec1999 -$5.08
Dec1998 -$4.81

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$3.55
Dec2015 -$1.56
Dec2014 -$1.53
Dec2013 -$1.26
Dec2012 -$0.09
Dec2011 $0.24
Dec2010 $0.90
Dec2009 $0.82
Dec2008 $0.92
Dec2007 $0.84
Dec2006 $1.61
Dec2005 $1.76
Dec2004 $1.22
Dec2003 $0.73
Dec2002 $1.35
Dec2001 $0.85
Dec2000 -$2.63

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

SurModics Inc Valuation – Initial Coverage $SRDX
Agilent Technologies Inc Valuation – February 2017 $A
Cooper Companies Inc Valuation – Initial Coverage $COO
Edwards Lifesciences Corp Valuation – January 2017 $EW
Baxter International Inc Valuation – January 2017 $BAX
CONMED Corporation Valuation – Initial Coverage $CNMD
Boston Scientific Corp Valuation – January 2017 $BSX
Centene Corp Valuation – Initial Coverage $CNC
Invacare Corporation Valuation – Initial Coverage $IVC
Becton Dickinson and Co Valuation – January 2017 $BDX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

HCA Holdings Inc Valuation – August 2016 $HCA

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how HCA Holdings Inc (HCA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): HCA Holdings, Inc. is a healthcare services company. The Company’s segment is operating hospitals and related healthcare entities. The Company operates approximately 168 hospitals, consisting of 164 general, acute care hospitals; three psychiatric hospitals, and one rehabilitation hospital. In addition, the Company operates approximately 116 freestanding surgery centers. Its facilities are located in approximately 20 states and England. The Company’s general, acute care hospitals typically provide a range of services to accommodate such medical specialties as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, as well as diagnostic and emergency services. Its psychiatric hospitals provide therapeutic programs, including child, adolescent and adult psychiatric care, adult and adolescent alcohol and drug abuse treatment and counseling. It operates approximately three psychiatric hospitals with over 396 licensed beds.

HCA Chart

HCA data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of HCA – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $29,094,241,789 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 534.43% Pass
6. Moderate PEmg Ratio PEmg < 20 15.36 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -3.74 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.44 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

HCA value chart August 2016

EPSmg $4.95
MG Growth Estimate 7.08%
MG Value $112.27
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $71.84
MG Value based on 0% Growth $42.11
Market Implied Growth Rate 3.43%
Current Price $76.12
% of Intrinsic Value 67.80%

HCA Holdings Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, the poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.37 in 2012 to an estimated $4.95 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.43% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into HCA Holdings Inc revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 15.36, which was below the industry average of 40.07, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-80.81.

HCA Holdings Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

HCA charts August 2016

Net Current Asset Value (NCAV) -$80.81
Graham Number $0.00
PEmg 15.36
Current Ratio 1.69
PB Ratio -3.74
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $9,095,000,000
Total Current Liabilities $5,396,000,000
Long-Term Debt $31,228,000,000
Total Assets $33,205,000,000
Intangible Assets $6,694,000,000
Total Liabilities $41,312,000,000
Shares Outstanding (Diluted Average) 398,659,000

Earnings Per Share History

Next Fiscal Year Estimate $6.33
Dec2015 $4.99
Dec2014 $4.16
Dec2013 $3.37
Dec2012 $3.49
Dec2011 $4.97
Dec2010 $2.76
Dec2009 $2.44
Dec2008 $0.00
Dec2007 $0.00
Dec2006 $0.00
Dec2005 $3.19
Dec2004 $2.58
Dec2003 $2.61
Dec2002 $1.59
Dec2001 $1.65
Dec2000 $0.39
Dec1999 $1.11
Dec1998 $0.73
Dec1997 -$0.46
Dec1996 $2.22

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.95
Dec2015 $4.24
Dec2014 $3.83
Dec2013 $3.58
Dec2012 $3.37
Dec2011 $2.88
Dec2010 $1.57
Dec2009 $1.03
Dec2008 $0.60
Dec2007 $1.16
Dec2006 $1.82
Dec2005 $2.60
Dec2004 $2.12
Dec2003 $1.75
Dec2002 $1.24
Dec2001 $0.94
Dec2000 $0.66

Recommended Reading:

Other ModernGraham posts about the company

HCA Holdings Inc. Analysis – Initial Coverage $HCA

Other ModernGraham posts about related companies

Universal Health Services Inc Valuation – August 2016 $UHS
Endo International PLC Valuation – August 2016 $ENDP
C R Bard Inc Valuation – August 2016 $BCR
Psychemedics Corp Valuation – August 2016 $PMD
Patterson Companies Inc Valuation – August 2016 $PDCO
Edwards Lifesciences Corp Valuation – August 2016 $EW
Baxter International Inc Valuation – August 2016 $BAX
Cerner Corporation Valuation – August 2016 $CERN
Stryker Corporation Valuation – August 2016 $SYK
Henry Schein Inc Valuation – July 2016 $HSIC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tenet Healthcare Corp Valuation – July 2016 $THC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Tenet Healthcare Corp (THC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Tenet Healthcare Corporation (Tenet) is a healthcare services company. The Company operates regionally focused, integrated healthcare delivery networks in large urban and suburban markets in the United States. The Company operates through three segments: Hospital Operations and other, Ambulatory Care and Conifer. With its networks, including acute care and specialty hospitals, which are engaged in providing outpatient facilities and related businesses, the Company provides a range of healthcare services in the communities it serve. It operates approximately 90 hospitals, 20 short-stay surgical hospitals, 475 outpatient centers, nine facilities in the United Kingdom and six health plans through its subsidiaries, partnerships and joint ventures. In addition, its Conifer Holdings, Inc. (Conifer) subsidiary provide healthcare business process services in the areas of revenue cycle management and technology-enabled performance improvement and health management solutions to health systems.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of THC – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,961,259,250 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.20 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -66.30% Fail
6. Moderate PEmg Ratio PEmg < 20 324.35 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.72 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.20 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 16.67 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

THC value chart July 2016

EPSmg $0.09
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $1.33
MG Value based on 0% Growth $0.78
Market Implied Growth Rate 157.92%
Current Price $29.84
% of Intrinsic Value N/A

Tenet Healthcare Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.4 in 2012 to an estimated $0.09 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 157.92% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Tenet Healthcare Corp scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

THC charts July 2016

Net Current Asset Value (NCAV) -$182.37
Graham Number $15.06
PEmg 324.35
Current Ratio 1.20
PB Ratio 4.72
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $5,129,000,000
Total Current Liabilities $4,268,000,000
Long-Term Debt $14,350,000,000
Total Assets $23,766,000,000
Intangible Assets $8,808,000,000
Total Liabilities $23,141,000,000
Shares Outstanding (Diluted Average) 98,768,000

Earnings Per Share History

Next Fiscal Year Estimate $1.60
Dec2015 -$1.41
Dec2014 $0.12
Dec2013 -$1.32
Dec2012 $1.30
Dec2011 $0.48
Dec2010 $8.16
Dec2009 $1.48
Dec2008 $0.20
Dec2007 -$0.76
Dec2006 $0.56
Dec2005 -$0.76
Dec2004 -$22.64
Dec2003 -$12.68
May2002 $6.24
May2001 $5.25
May2000 $2.56
May1999 $2.11
May1998 $2.24
May1997 -$2.24
May1996 $4.35

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.09
Dec2015 -$0.50
Dec2014 $0.56
Dec2013 $1.19
Dec2012 $2.40
Dec2011 $2.61
Dec2010 $3.09
Dec2009 $0.42
Dec2008 -$1.63
Dec2007 -$4.12
Dec2006 -$5.82
Dec2005 -$7.64
Dec2004 -$8.81
Dec2003 -$1.03
May2002 $4.42
May2001 $3.00
May2000 $1.85

Recommended Reading:

Other ModernGraham posts about the company

30 Companies in the Spotlight This Week – 5/23/15
Tenet Healthcare Corporation Annual Valuation – 2015 $THC
16 Companies in the Spotlight This Week – 5/24/14
Tenet Healthcare Corp 2014 Annual Valuation $THC

Other ModernGraham posts about related companies

Laboratory Corp of America Holdings Valuation – July 2016 $LH
Medtronic PLC Valuation – July 2016 $MDT
Intuitive Surgical Inc Valuation – July 2016 $ISRG
Cardinal Health Inc Valuation – July 2016 $CAH
PerkinElmer Inc Valuation – July 2016 $PKI
Varian Medical Systems Inc Valuation – July 2016 $VAR
St. Jude Medical Inc Valuation – June 2016 $STJ
Zimmer Biomet Holdings Inc Valuation – June 2016 $ZBH
Waters Corporation Valuation – May 2016 $WAT
Align Technology Inc Valuation – May 2016 $ALGN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

DaVita HealthCare Partners Inc Valuation – November 2015 Update $DVA

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how DaVita HealthCare Partners Inc (DVA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): DaVita HealthCare Partners Inc. consists of two divisions, Kidney Care and HealthCare Partners (HCP). Kidney Care is a provider of dialysis services in the United States, treating patients with chronic kidney failure and end stage renal disease (ESRD). Kidney Care division develops innovative clinical care, offers integrated treatment plans, personalized care teams and health-management services. As of December 31, 2014, we provided dialysis and administrative services in the U.S. through a network of 2,179 outpatient dialysis centers in 46 states and the District of Columbia, serving a total of approximately 173,000 patients. HealthCare Partners division is a patient- and physician-focused integrated health care delivery and management company. HealthCare Partners manages and operates medical groups and affiliated physician networks in Arizona, California, Nevada, Florida and New Mexico. As of December 2014, HealthCare Partners had approximately 837,000 members under its care.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of DVA – November 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $15,489,511,213 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.97 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 72.71% Pass
6. Moderate PEmg Ratio PEmg < 20 26.77 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.19 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.90 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

DVA value Chart November 2015

EPSmg $2.74
MG Growth Estimate 4.48%
MG Value $47.86
Opinion Overvalued
MG Value based on 3% Growth $39.76
MG Value based on 0% Growth $23.31
Market Implied Growth Rate 9.14%
Current Price $73.41
% of Intrinsic Value 153.38%

DaVita HealthCare Partners Inc. does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned by the low current ratio, lack of dividends, and high PEmg and PB ratios.  The Enterprising Investor has concerns with the level of debt relative to the net current assets and the lack of dividends. As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.11 in 2011 to an estimated $2.74 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 9.14% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on DaVita HealthCare Partners Inc (DVA)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

DVA Charts November 2015

Net Current Asset Value (NCAV) -$42.30
Graham Number $34.22
PEmg 26.77
Current Ratio 1.97
PB Ratio 3.19
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $4,737,886,000
Total Current Liabilities $2,410,554,000
Long-Term Debt $9,082,096,000
Total Assets $18,894,830,000
Intangible Assets $11,314,360,000
Total Liabilities $13,904,480,000
Shares Outstanding (Diluted Average) 216,691,000

Earnings Per Share History

Next Fiscal Year Estimate $2.20
Dec14 $3.33
Dec13 $2.95
Dec12 $2.74
Dec11 $2.48
Dec10 $1.97
Dec09 $2.03
Dec08 $1.77
Dec07 $1.78
Dec06 $1.37
Dec05 $1.10
Dec04 $1.08
Dec03 $0.78
Dec02 $0.61
Dec01 $0.48
Dec00 $0.05
Dec99 -$0.60
Dec98 -$0.04
Dec97 $0.19
Dec96 $0.12
Dec95 $0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.74
Dec14 $2.91
Dec13 $2.61
Dec12 $2.36
Dec11 $2.11
Dec10 $1.88
Dec09 $1.76
Dec08 $1.55
Dec07 $1.37
Dec06 $1.11
Dec05 $0.92
Dec04 $0.76
Dec03 $0.48
Dec02 $0.26
Dec01 $0.06
Dec00 -$0.12
Dec99 -$0.15

Recommended Reading:

Other ModernGraham posts about the company

30 Companies in the Spotlight This Week – 11/15/14
DaVita Healthcare Partners Inc. Annual Valuation – 2014 $DVA

Other ModernGraham posts about related companies

Align Technology Inc. Valuation – November 2015 Update $ALGN
Varian Medical Systems Inc. Valuation – November 2015 Update $VAR
Psychemedics Corporation Valuation – November 2015 Update $PMD
C.R. Bard Inc. Valuation – November 2015 Update $BCR
Henry Schein Inc. Valuation – October 2015 Update $HSIC
Medtronic PLC Valuation – October 2015 Update $MDT
PerkinElmer Inc. Analysis – October 2015 Update $PKI
Quest Diagnostics Inc. Analysis – October 2015 Update $DGX
Stryker Corporation Analysis – October 2015 Update $SYK
The Best Companies of the Medical Industry – September 2015

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

HCA Holdings Inc. Analysis – Initial Coverage $HCA

220px-Hospital_Corporation_of_America_(logo)Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – July 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how HCA Holdings Inc. (HCA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): HCA Holdings, Inc. is a holding company. The Company is a health care services company. The Company owns, manages or operates hospitals, freestanding surgery centers, diagnostic and imaging centers, radiation and oncology therapy centers, rehabilitation and physical therapy centers and various other facilities. The Company’s general, acute care hospitals provide a range of services to accommodate medical specialties, such as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, as well as diagnostic and emergency services. The general, acute care hospitals also provide outpatient services, such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. Outpatient and ancillary health care services are provided by the Company’s general, acute care hospitals, freestanding surgery centers, freestanding emergency care facilities, diagnostic centers and rehabilitation facilities.

[level-free]

To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.
[/level-free]
[level-mg-stocks-screens-subscriber]

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $91.18
MG Value $51.42
MG Opinion Overvalued
Value Based on 3% Growth $62.06
Value Based on 0% Growth $36.38
Market Implied Growth Rate 6.40%
Net Current Asset Value (NCAV) -$68.41
PEmg 21.30
Current Ratio 1.27
PB Ratio -5.21

Balance Sheet – March 2015

Current Assets $9,130,000,000
Current Liabilities $7,172,000,000
Total Debt $27,406,000,000
Total Assets $31,288,000,000
Intangible Assets $6,415,000,000
Total Liabilities $38,908,000,000
Outstanding Shares 435,300,000

Earnings Per Share

2015 (estimate) $5.10
2014 $4.16
2013 $3.37
2012 $3.49
2011 $4.97
2010 $2.76
2009 $2.44
2008 $7.13
2007 $0.00
2006 $0.00
2005 $3.19

Earnings Per Share – ModernGraham

2015 (estimate) $4.28
2014 $3.83
2013 $3.58
2012 $3.84
2011 $3.83
2010 $3.00

Dividend History
HCA Holdings Inc. does not pay a dividend.
Free Cash Flow

Conclusion:

HCA Holdings Inc. does not qualify for either the Defensive Investor and the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, lack of dividends, insufficient earnings stability over the last ten years, and the high PEmg ratio.  The Enterprising Investor is concerned with the level of debt relative to the current assets and the lack of dividends.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities or proceed with a speculative attitude.  As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $3.83 in 2011 to an estimated $4.28 for 2015.  This level of earnings growth does not support the market’s implied estimate of 6.4% annual earnings growth over the next 7-10 years, and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value falling below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on HCA Holdings Inc. (HCA)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

 

Back To Top