Standing out among the Street's worst performers today is HCA Healthcare, a medical care facility company whose shares slumped -4.0% to a price of $457.64, not far from its average analyst target price of $476.67.
The average analyst rating for the stock is buy. HCA underperformed the S&P 500 index by -6.0% during today's afternoon session, but outpaced it by 21.0% over the last year with a return of 33.1%.
HCA Healthcare, Inc., through its subsidiaries, owns and operates hospitals and related healthcare entities in the United States. The company is categorized within the healthcare sector. The catalysts that drive valuations in this sector are complex. From demographics, regulations, scientific breakthroughs, to the emergence of new diseases, healthcare companies see their prices swing on the basis of a variety of factors.
HCA Healthcare's trailing 12 month P/E ratio is 17.7, based on its trailing EPS of $25.88. The company has a forward P/E ratio of 15.4 according to its forward EPS of $24.55 -- which is an estimate of what its earnings will look like in the next quarter. The P/E ratio is the company's share price divided by its earnings per share. In other words, it represents how much investors are willing to spend for each dollar of the company's earnings (revenues minus the cost of goods sold, taxes, and overhead). As of the third quarter of 2024, the health care sector has an average P/E ratio of 22.94, and the average for the S&P 500 is 29.3.
When we subtract capital expenditures from operating cash flows, we are left with the company's free cash flow, which for HCA Healthcare was $5.64 Billion as of its last annual report. This represents the amount of money that is available for reinvesting in the business, or for paying out to investors in the form of a dividend. With its strong cash flows, HCA is in a position to do either -- which can encourage more investors to place their capital in the company. Over the last four years, the company's free cash flow has been growing at a rate of 2.8% and has on average been $4.95 Billion.
Since it has a Very low P/E ratio, no published P/B ratio, and generally positive cash flows with a flat trend, HCA Healthcare is likely undervalued at today's prices. The company has strong growth indicators because of an above average PEG ratio and strong operating margins with a stable trend. We hope you enjoyed this overview of HCA's fundamentals. Be sure to check the numbers for yourself, especially focusing on their trends over the last few years.
