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Should You Add Universal Health (UHS) to Your Portfolio?
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Universal Health Services, Inc. (UHS - Free Report) is aided by improved adjusted admissions, an expanding healthcare portfolio and solid cash reserves. A favorable business outlook for 2024 reinforces investors’ confidence in the stock.
Top Zacks Rank & Upbeat Price Performance
Universal Health currently carries a Zacks Rank #2 (Buy).
The stock has soared 42.9% in the past year, compared with the industry’s 28.2% growth. The Zacks Medical sector has risen 11.9% and the S&P 500 composite has increased 27.5% in the same time frame.
Image Source: Zacks Investment Research
Favorable Style Score
UHS carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score in combination with a solid Zacks Rank, are the best investment bets.
Robust Growth Prospects
The Zacks Consensus Estimate for Universal Health’s 2024 earnings is pegged at $12.90 per share, which indicates an improvement of 22.4% from the 2023 reported figure. The consensus mark for revenues is $15.5 billion, implying a rise of 8.3% from the 2023 figure.
The consensus mark for 2025 earnings is pegged at $14.47 per share, suggesting an improvement of 12.2% from the 2024 estimate. The same for revenues is $16.1 billion, hinting at a 4.3% increase from the 2024 estimate.
Impressive Earnings Surprise History
Universal Health’s bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 5.87%.
Valuation: Cheaply Priced
Price-to-earnings (P/E) is one of the multiples used for valuing healthcare stocks. UHS has a reading of 13.35, compared with the hospital industry’s forward 12-month P/E ratio of 15.63. It is quite evident that the stock is currently undervalued.
A Solid 2024 View
UHS anticipates revenues within $15.411-$15.706 billion for 2024, the midpoint of which indicates 7.9-10% improvement from the 2023 reported figure.
Earnings per share are forecasted to lie between $13 and $14, the midpoint of which suggests 23.3-32.8% increase from the 2023 figure.
Key Drivers
Revenues of Universal Health continue to benefit on the back of expanding patient volumes across its Acute Care Hospital Services and Behavioral Health Care Services segments. Admissions in the segments improved 7.6% and 3.2%, respectively, year over year on a same-facility basis in 2023.
The rebound of deferred elective procedures is likely to keep boosting patient volumes and occupancy levels in the days ahead. Patient volumes remain the most significant top-line contributor for any healthcare facility operator.
Universal Health boasts a diversified treatment network comprising 360 inpatient facilities and 48 outpatient and other facilities in 39 states, Washington, D.C., the UK and Puerto Rico as of Feb 27, 2024. Growing incidence of mental health issues among Americans is likely to sustain the solid demand for UHS’ behavioral healthcare services offered through its 333 inpatient behavioral healthcare facilities.
UHS resorts to service launches, enhancement of existing services, recruitment of highly qualified physicians, and the application of financial and operational controls. This, in turn, further solidifies its capabilities and leads to higher profitability of owned hospitals. Buyouts are a means for Universal Health to step into newer markets and upgrade healthcare delivery capabilities. It spent $4 million on the acquisition of businesses and property during 2023. The company even considers the divestiture of underperforming facilities.
To pursue uninterrupted growth-related initiatives, a solid financial position is a dire need. The same is the case with Universal Health, which has solid cash reserves and cash-generation abilities. As of Dec 31, 2023, cash and cash equivalents rose 16.2% from the 2022-end level. It also generated operating cash flows of $1.3 billion in 2023. In addition to business investments, a strong financial stand also enables UHS to engage in the prudent deployment of capital via share buybacks and dividend payments. It has resorted to a constant dividend payout of 20 cents per share since 2019.
Medpace’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 12.42%. The consensus estimate for MEDP’s 2024 earnings suggests an improvement of 19.1% while the consensus mark for revenues indicates growth of 15.9% from the respective year-ago reported figures.
The consensus estimate for MEDP’s 2024 earnings has moved 5.3% north in the past 60 days. Shares of Medpace have soared 121.1% in the past year.
HCA Healthcare’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, the average surprise being 9.78%. The consensus estimate for HCA’s 2024 earnings indicates a rise of 7.8%, while the consensus mark for revenues suggests an improvement of 6.2% from the corresponding year-ago reported figures.
The consensus estimate for HCA’s 2024 earnings has moved 0.6% north in the past 30 days. Shares of HCA Healthcare have gained 26.9% in the past year.
Lantheus’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.84%. The consensus estimate for LNTH’s 2024 earnings indicates a rise of 5.6%, while the consensus mark for revenues suggests an improvement of 10.3% from the corresponding year-ago reported figures.
The consensus mark for LNTH’s 2024 earnings has moved 5.1% north in the past 30 days. Shares of Lantheus have declined 24.3% in the past year.
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Should You Add Universal Health (UHS) to Your Portfolio?
Universal Health Services, Inc. (UHS - Free Report) is aided by improved adjusted admissions, an expanding healthcare portfolio and solid cash reserves. A favorable business outlook for 2024 reinforces investors’ confidence in the stock.
Top Zacks Rank & Upbeat Price Performance
Universal Health currently carries a Zacks Rank #2 (Buy).
The stock has soared 42.9% in the past year, compared with the industry’s 28.2% growth. The Zacks Medical sector has risen 11.9% and the S&P 500 composite has increased 27.5% in the same time frame.
Image Source: Zacks Investment Research
Favorable Style Score
UHS carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score in combination with a solid Zacks Rank, are the best investment bets.
Robust Growth Prospects
The Zacks Consensus Estimate for Universal Health’s 2024 earnings is pegged at $12.90 per share, which indicates an improvement of 22.4% from the 2023 reported figure. The consensus mark for revenues is $15.5 billion, implying a rise of 8.3% from the 2023 figure.
The consensus mark for 2025 earnings is pegged at $14.47 per share, suggesting an improvement of 12.2% from the 2024 estimate. The same for revenues is $16.1 billion, hinting at a 4.3% increase from the 2024 estimate.
Impressive Earnings Surprise History
Universal Health’s bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 5.87%.
Valuation: Cheaply Priced
Price-to-earnings (P/E) is one of the multiples used for valuing healthcare stocks. UHS has a reading of 13.35, compared with the hospital industry’s forward 12-month P/E ratio of 15.63. It is quite evident that the stock is currently undervalued.
A Solid 2024 View
UHS anticipates revenues within $15.411-$15.706 billion for 2024, the midpoint of which indicates 7.9-10% improvement from the 2023 reported figure.
Earnings per share are forecasted to lie between $13 and $14, the midpoint of which suggests 23.3-32.8% increase from the 2023 figure.
Key Drivers
Revenues of Universal Health continue to benefit on the back of expanding patient volumes across its Acute Care Hospital Services and Behavioral Health Care Services segments. Admissions in the segments improved 7.6% and 3.2%, respectively, year over year on a same-facility basis in 2023.
The rebound of deferred elective procedures is likely to keep boosting patient volumes and occupancy levels in the days ahead. Patient volumes remain the most significant top-line contributor for any healthcare facility operator.
Universal Health boasts a diversified treatment network comprising 360 inpatient facilities and 48 outpatient and other facilities in 39 states, Washington, D.C., the UK and Puerto Rico as of Feb 27, 2024. Growing incidence of mental health issues among Americans is likely to sustain the solid demand for UHS’ behavioral healthcare services offered through its 333 inpatient behavioral healthcare facilities.
UHS resorts to service launches, enhancement of existing services, recruitment of highly qualified physicians, and the application of financial and operational controls. This, in turn, further solidifies its capabilities and leads to higher profitability of owned hospitals. Buyouts are a means for Universal Health to step into newer markets and upgrade healthcare delivery capabilities. It spent $4 million on the acquisition of businesses and property during 2023. The company even considers the divestiture of underperforming facilities.
To pursue uninterrupted growth-related initiatives, a solid financial position is a dire need. The same is the case with Universal Health, which has solid cash reserves and cash-generation abilities. As of Dec 31, 2023, cash and cash equivalents rose 16.2% from the 2022-end level. It also generated operating cash flows of $1.3 billion in 2023. In addition to business investments, a strong financial stand also enables UHS to engage in the prudent deployment of capital via share buybacks and dividend payments. It has resorted to a constant dividend payout of 20 cents per share since 2019.
Other Stocks to Consider
Some other top-ranked stocks in the Medical space are Medpace Holdings, Inc. (MEDP - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Lantheus Holdings, Inc. (LNTH - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 12.42%. The consensus estimate for MEDP’s 2024 earnings suggests an improvement of 19.1% while the consensus mark for revenues indicates growth of 15.9% from the respective year-ago reported figures.
The consensus estimate for MEDP’s 2024 earnings has moved 5.3% north in the past 60 days. Shares of Medpace have soared 121.1% in the past year.
HCA Healthcare’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, the average surprise being 9.78%. The consensus estimate for HCA’s 2024 earnings indicates a rise of 7.8%, while the consensus mark for revenues suggests an improvement of 6.2% from the corresponding year-ago reported figures.
The consensus estimate for HCA’s 2024 earnings has moved 0.6% north in the past 30 days. Shares of HCA Healthcare have gained 26.9% in the past year.
Lantheus’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.84%. The consensus estimate for LNTH’s 2024 earnings indicates a rise of 5.6%, while the consensus mark for revenues suggests an improvement of 10.3% from the corresponding year-ago reported figures.
The consensus mark for LNTH’s 2024 earnings has moved 5.1% north in the past 30 days. Shares of Lantheus have declined 24.3% in the past year.