HCA - Embedded Expectations Analysis - 2020 07 30
HCA Healthcare, Inc. (HCA:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.6x Uniform P/E, implying bearish expectations for the firm. Even with management's concerns about near-term headwinds, markets are overly pessimistic and equity upside is warranted given the firm's positioning and highly profitable operationsSpecifically, management may be concerned about their ability to collaborate with physicians, and may lack confidence in their ability to sustain expense improvements going forward. Moreover, they may be exaggerating the acuity of coronavirus patients relative to typical patients, and might have concerns about the sustainability of stimulus funding. Finally, they may be concerned about their California market and the unknowns caused by coronavirus
Even with management's concerns about near-term headwinds, the firm's positioning in the market, and its highly profitable operations suggest markets are overly bearish, and upside is warranted
HCA Healthcare is a holding company. Through its subsidiaries, partnerships and joint ventures, the company owns and operates hospitals and related health care entities. Most of the company's general, acute care hospitals provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services. The general, acute care hospitals also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. The company's psychiatric hospitals provide therapeutic programs including child, adolescent and adult psychiatric care, adolescent and adult alcohol and drug abuse treatment and counseling.
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