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Universal Health Plunges 31.4% YTD: Will It Bounce Back?
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Universal Health Services, Inc.’s (UHS - Free Report) stock has plunged due to the widespread volatility induced by COVID -19.
This Zacks Rank #3 (Hold) company has lost 31.4% year to date, narrower than its industry's decline of 35.5%. The performance also looks better than other companies in the same space, such as MEDNAX, Inc. (MD - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and Acadia Healthcare Company, Inc. (ACHC - Free Report) , which have lost 57%, 59.2% and 43.9%, respectively, in the same time frame.
The company has been going through a tough time for a while now as the coronavirus pandemic escalated worldwide. The COVID-19 spread required hospitals to keep their elective procedures on hold to accommodate any potential surge in the COVID-19 cases.
Cancellation in elective surgeries will hurt the company’s revenues. Moreover, it is feared that the pandemic may cause recession. Such a depressive economic scenario may induce job cuts, indicating fewer people to be brought under private insurance coverage while more members to be insured by Government health schemes of Medicare and Medicaid. Since profitability of the Government-sponsored health insurance plans is lower than those under employer-sponsored plans, margins of the hospitals are likely to get dented. Higher number of individuals without sufficient health insurance coverage might also induce bad debts for hospitals from unpaid medical bills.
Is There Room to Improve?
Against all odds, it should be noted that the company’s solid fundamentals will help it bounce back once the overall economic condition improves.
Universal Health’s revenues have been witnessing an uptick since 2010 on the back of solid inorganic growth and segmental strength at Acute Care and Behavioral Health. Moreover, buyouts played a key role in building the company’s growth trajectory by adding facilities, beds and hospitals to its business portfolio. We believe, the company will continue making acquisitions that will help it expand its domestic and international presence along with leveraging its position to weather the regulatory uncertainty in the healthcare sector.
Its financial potency also impresses. In July, the company hiked its cash dividend by 50%, which was paid out on Sep 16, 2019 to its shareholders of record on Sep 3, 2019. Moreover, the company's leverage ratio (debt to equity) stands at 77.3%, much lower than its industry's level/industry average.
The stock carries an impressive VGM Score of A as well. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
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Universal Health Plunges 31.4% YTD: Will It Bounce Back?
Universal Health Services, Inc.’s (UHS - Free Report) stock has plunged due to the widespread volatility induced by COVID -19.
This Zacks Rank #3 (Hold) company has lost 31.4% year to date, narrower than its industry's decline of 35.5%. The performance also looks better than other companies in the same space, such as MEDNAX, Inc. (MD - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and Acadia Healthcare Company, Inc. (ACHC - Free Report) , which have lost 57%, 59.2% and 43.9%, respectively, in the same time frame.
The company has been going through a tough time for a while now as the coronavirus pandemic escalated worldwide. The COVID-19 spread required hospitals to keep their elective procedures on hold to accommodate any potential surge in the COVID-19 cases.
Cancellation in elective surgeries will hurt the company’s revenues. Moreover, it is feared that the pandemic may cause recession. Such a depressive economic scenario may induce job cuts, indicating fewer people to be brought under private insurance coverage while more members to be insured by Government health schemes of Medicare and Medicaid. Since profitability of the Government-sponsored health insurance plans is lower than those under employer-sponsored plans, margins of the hospitals are likely to get dented. Higher number of individuals without sufficient health insurance coverage might also induce bad debts for hospitals from unpaid medical bills.
Is There Room to Improve?
Against all odds, it should be noted that the company’s solid fundamentals will help it bounce back once the overall economic condition improves.
Universal Health’s revenues have been witnessing an uptick since 2010 on the back of solid inorganic growth and segmental strength at Acute Care and Behavioral Health. Moreover, buyouts played a key role in building the company’s growth trajectory by adding facilities, beds and hospitals to its business portfolio. We believe, the company will continue making acquisitions that will help it expand its domestic and international presence along with leveraging its position to weather the regulatory uncertainty in the healthcare sector.
Its financial potency also impresses. In July, the company hiked its cash dividend by 50%, which was paid out on Sep 16, 2019 to its shareholders of record on Sep 3, 2019. Moreover, the company's leverage ratio (debt to equity) stands at 77.3%, much lower than its industry's level/industry average.
The stock carries an impressive VGM Score of A as well. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
The stock’s Zacks Consensus Estimate for current-year earnings suggests 6.6% growth from its year-ago reported number. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>