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HEALTH NET INC (HNT): Free Stock Analysis
TENET HEALTH (THC): Free Stock Analysis
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On Mar 14, 2013, shares of
Tenet Healthcare Corporation
) hit a 52-week high of $44.96. The company in fourth quarter
2012 managed to recover from the loss posted in the year-ago
period. Tenet delivered positive earnings surprise in 2 out of 4
quarters in 2012 with an average beat of 28.91%. It has been
delivering consistent earnings growth for the past 9 years,
On Feb 26, 2013, Tenet reported fourth-quarter 2012 earnings from
continuing operations of 52 cents reversing the loss of 55 cents
in the year-ago quarter. Results were driven by improved revenues
and controlled expenses.
Top-line growth for Tenet was 5.4% in 2012. Strong volume growth
coupled with improved pricing was responsible for the
Tenet has also been working toward enhancing its portfolio
through acquisitions and strategic liaisons. The renewal of the
service contract with
), effective May 1, 2013 is likely to enhance its operations.
Additionally, in Jan 2013, Tenet announced a joint venture with
the non-profit healthcare organization John Muir Health and
restored ties with
). In Feb 2013, Tenet decided to acquire Emanuel Medical Center
to widen its integrated healthcare network.
During its earnings release, Tenet guided operating income to be
about $835-$965 million in 2013. Consequently, adjusted earnings
per share for 2013 were guided at $2.31-$3.31 for 2013. The Zacks
Consensus Estimate for 2013 of $2.82 per share is within the
company's guidance. The estimate represents a year-over-year
increase of 65.88%.
However, valuation looks stretched for Tenet. The shares are
trading at a 6.7% premium to the peer group average on a forward
price to earnings basis, while at a considerable premium to the
peer group average on a price to book basis. The return on equity
is 5.2% above the peer group average. Nevertheless, the 1-year
return from the stock is 98.12%, much above S&P 500's return
In the long-term, increasing operating revenues and growth
through acquisitions are expected to be beneficial. Moreover, the
recent capital management plans are expected to enhance returns,
capital structure and shareholder value. Overall, we believe that
strong organic and inorganic growth can help boost the future
The overall long-term expected earnings growth rate for this
stock is 10.25%.
Tenet currently carries a Zacks Rank #3 (Hold). Another
healthcare services company
Coventry Healthcare Inc.
) carries a Zacks Rank #2 (Buy) and is worth noting.