It's been a great morning session for R1 RCM investors, who saw their shares rise 1.4% to a price of $14.12 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
R1 RCM Inc. provides technology-driven solutions that transform the patient experience and financial performance of hospitals, health systems, and medical groups. The company belongs to the Healthcare sector, which has an average price to earnings (P/E) ratio of 13.21 and an average price to book (P/B) ratio of 4.07. In contrast, R1 RCM has a trailing 12 month P/E ratio of 128.4 and a P/B ratio of 2.1.
P/B ratios are calculated by dividing the company's market value by its equity's book value. Equity refers to all of the company's assets minus its liabilities. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
R1 RCM's PEG ratio is 42.83, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.