Today, we’ll take a look at the well-established company Universal Health Services ( NYSE:UHS ). The company’s stock has risen relatively sharply over the past few weeks, leading the way among gainers on the New York Stock Exchange. The company’s trading levels have reached their highest level in the past year, following a recent recovery in the stock price. As a large-cap stock with high analyst coverage, you can assume any recent changes in the company’s outlook have already been priced in. But what if you still have the opportunity to buy? Let’s take a closer look at Universal Health Services’ valuation and outlook to determine if there’s still a good bargain opportunity.
See our latest analysis for Universal Health Services.
What is the value of universal health services?
Good news, investors! According to our price multiple model, which compares the company’s price-to-earnings ratio to the industry average, Universal Health Services is still a bargain right now. In this example, we used the price-to-earnings ratio (PE) given that there is not enough information to reliably predict a stock’s cash flows. Universal Health Services’s multiple of 16.6x is lower than its peer group average of 24.02x, indicating that the stock is trading at a discount relative to the Healthcare industry. However, given that the share of universal health services is quite volatile (i.e. its price fluctuations are magnified relative to the rest of the market), this could lead to a decline in prices. This means that you may be given a chance to purchase again in the future. This is based on its high beta value, which is a good indicator of stock price volatility.
Can we expect growth in universal health services?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a solid outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Universal Health Services’ revenue over the next few years is expected to increase by 32%, indicating a very optimistic future ahead. This should lead to stronger cash flow and a higher share price.
what this means to you
Are you a shareholder? UHS is currently trading below its industry P/E ratio, so now may be a great time to increase your holdings in the stock. Despite the positive outlook, it seems like this growth is not yet fully factored into the stock price. However, there are also other factors to consider, such as capital structure, which may explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on UHS for a while, now might be the time to get into the stock. Although the company’s bright future earnings outlook is not yet fully reflected in the current share price, this means it’s not too late to buy UHS. However, to make an informed investment decision, consider other factors, such as the strength of its balance sheet, before making any investment decisions.
With this in mind, you should not consider investing in stocks unless you fully understand the risks. For example, we discovered that 1 warning sign To understand the full picture of universal health services, you need to look closely.
If you are no longer interested in Universal Health Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
