Tenet Healthcare Surges: A Positive Outlook for Investors
Tenet Healthcare THC, currently holding a Zacks Rank #1 (Strong Buy), operates hospitals and related facilities across various urban and rural regions.
The company’s adjusted earnings outlook has seen an overall positive shift, indicating a strong potential for stock performance in the short term.
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Alongside favorable earnings revisions, Tenet is part of the Zacks Medical – Hospital industry, which is currently among the top 10% of all industries tracked by Zacks. Here’s a closer look at the company’s standing.
Positive Adjustments in Earnings Guidance
Tenet Healthcare’s stock has performed remarkably well this year, up 115% in 2024, even surpassing many members of the popular “Mag 7” stocks. This growth is driven by consistently strong quarterly results, which were further boosted by a recent update on adjusted EBITDA guidance.
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The company’s cash flow also improved significantly, with free cash flow increasing by nearly 80% to $1.8 billion compared to the previous year. Shareholders may appreciate Tenet’s decision to buy back $124 million worth of its own shares during this period.
As illustrated below, THC has been proactive in repurchasing its shares over recent years, helping stabilize its stock price.
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Currently, Tenet trades at a 14.1X forward 12-month earnings multiple. While this is slightly above its five-year median of 12.2X, it remains well below its five-year high of 18.7X. The company’s PEG ratio stands at 0.7X, reflecting its potential for both growth and value, and it earns a Style Score of ‘A’ for Value.
CEO Saum Sutaria summed up the quarterly results with optimism:
“Our businesses continue to produce strong results and generate robust free cash flow, with same-store revenue growth and profitability exceeding our expectations due to focused execution and disciplined operations.”
He added:
“We are advancing our portfolio transformation and are well-positioned to deliver enhanced value to our patients, physician partners, and shareholders.”
Conclusion: A Strong Option for Investors
For investors looking to identify potential winners, leveraging the Zacks Rank can be a powerful strategy. Stocks receiving the top Zacks Rank #1 (Strong Buy) are anticipated to outperform the market significantly.
With its strong position and Zacks Rank #1 (Strong Buy), Tenet Healthcare Inc. (THC) stands out as a promising stock to consider.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
