Tenet Healthcare Corp

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THC : NYSE : Health Care
$23.74 -0.95 | -3.80%
Today's Range: 24.04 - 24.96
Avg. Daily Volume: 1,455,300
08/24/16 - 2:25 PM ET

Financial Analysis


TENET HEALTHCARE CORP's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its industry. TENET HEALTHCARE CORP has weak liquidity. Currently, the Quick Ratio is 0.88 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

At the same time, stockholders' equity ("net worth") has significantly decreased by 34.86% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)4868.04492.0
EBITDA ($mil)587.0552.0
EBIT ($mil)372.0355.0
Net Income ($mil)-46.0-61.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)656.0299.0
Total Assets ($mil)24240.022746.0
Total Debt ($mil)14501.014754.0
Equity ($mil)523.0803.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin12.0612.29
EBITDA Margin12.0512.28
Operating Margin7.647.9
Sales Turnover0.810.77
Return on Assets-0.950.24
Return on Equity-43.47.09
Debt Q2 FY16 Q2 FY15
Current Ratio1.131.59
Debt/Capital0.970.95
Interest Expense244.0217.0
Interest Coverage1.521.64


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)99.5299.32
Div / share0.00.0
EPS-0.44-0.6
Book value / share5.268.09
Institutional Own % n/a n/a
Avg Daily Volume1418380.02329051.0

Valuation


HOLD. The current P/E ratio is negative, which has no meaningful value in the assessment of premium or discount valuation, it simply displays that the company has negative earnings. Conducting a second comparison, its price-to-book ratio of 4.60 indicates a significant premium versus the S&P 500 average of 2.83 and a premium versus the industry average of 3.23. The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. After reviewing these and other key valuation criteria, TENET HEALTHCARE CORP proves to trade at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
THC NM Peers 20.87   THC 1.90 Peers 12.68

Neutral. The absence of a valid P/E ratio happens when a stock can not be valued on the basis of a negative stream of earnings.

THC's P/E is negative making this valuation measure meaningless.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

THC is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
THC 10.55 Peers 16.00   THC NA Peers 0.85

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

THC is trading at a valuation on par with its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

Ratio not available.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
THC 4.60 Peers 3.23   THC -501.75 Peers 26.83

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

THC is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, THC is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
THC 0.12 Peers 0.78   THC 11.81 Peers 14.20

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

THC is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

THC trails its peers on the basis of sales growth

 

 

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