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Tenet Healthcare Corporation (THC) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Tenet Healthcare (THC - Free Report) ? Shares have been on the move with the stock up 7.1% over the past month. The stock hit a new 52-week high of $151 in the previous session. Tenet Healthcare has gained 92.3% since the start of the year compared to the 7.3% move for the Zacks Medical sector and the 27.4% return for the Zacks Medical - Hospital industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 24, 2024, Tenet reported EPS of $2.31 versus consensus estimate of $1.89.
For the current fiscal year, Tenet is expected to post earnings of $8.87 per share on $20.25 billion in revenues. This represents a 27.08% change in EPS on a -1.46% change in revenues. For the next fiscal year, the company is expected to earn $8.81 per share on $21.12 billion in revenues. This represents a year-over-year change of -0.75% and 4.32%, respectively.
Valuation Metrics
Tenet may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Tenet has a Value Score of A. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 16.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.2X. On a trailing cash flow basis, the stock currently trades at 9X versus its peer group's average of 10.3X. Additionally, the stock has a PEG ratio of 1.31. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Tenet currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Tenet passes the test. Thus, it seems as though Tenet shares could still be poised for more gains ahead.
How Does THC Stack Up to the Competition?
Shares of THC have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is HCA Healthcare, Inc. (HCA - Free Report) . HCA has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. HCA Healthcare, Inc. beat our consensus estimate by 10.66%, and for the current fiscal year, HCA is expected to post earnings of $21.37 per share on revenue of $69.35 billion.
Shares of HCA Healthcare, Inc. have gained 1% over the past month, and currently trade at a forward P/E of 16.09X and a P/CF of 11X.
The Medical - Hospital industry is in the top 2% of all the industries we have in our universe, so it looks like there are some nice tailwinds for THC and HCA, even beyond their own solid fundamental situation.
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Tenet Healthcare Corporation (THC) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Tenet Healthcare (THC - Free Report) ? Shares have been on the move with the stock up 7.1% over the past month. The stock hit a new 52-week high of $151 in the previous session. Tenet Healthcare has gained 92.3% since the start of the year compared to the 7.3% move for the Zacks Medical sector and the 27.4% return for the Zacks Medical - Hospital industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 24, 2024, Tenet reported EPS of $2.31 versus consensus estimate of $1.89.
For the current fiscal year, Tenet is expected to post earnings of $8.87 per share on $20.25 billion in revenues. This represents a 27.08% change in EPS on a -1.46% change in revenues. For the next fiscal year, the company is expected to earn $8.81 per share on $21.12 billion in revenues. This represents a year-over-year change of -0.75% and 4.32%, respectively.
Valuation Metrics
Tenet may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Tenet has a Value Score of A. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 16.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.2X. On a trailing cash flow basis, the stock currently trades at 9X versus its peer group's average of 10.3X. Additionally, the stock has a PEG ratio of 1.31. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Tenet currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Tenet passes the test. Thus, it seems as though Tenet shares could still be poised for more gains ahead.
How Does THC Stack Up to the Competition?
Shares of THC have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is HCA Healthcare, Inc. (HCA - Free Report) . HCA has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. HCA Healthcare, Inc. beat our consensus estimate by 10.66%, and for the current fiscal year, HCA is expected to post earnings of $21.37 per share on revenue of $69.35 billion.
Shares of HCA Healthcare, Inc. have gained 1% over the past month, and currently trade at a forward P/E of 16.09X and a P/CF of 11X.
The Medical - Hospital industry is in the top 2% of all the industries we have in our universe, so it looks like there are some nice tailwinds for THC and HCA, even beyond their own solid fundamental situation.