UNIVERSAL HEALTH SERVICES-B (NYSE:UHS) – An Undervalued Stock Worth Considering

UNIVERSAL HEALTH SERVICES-B (NYSE:UHS) was identified by our stock screener as a decent value pick, offering a strong valuation while maintaining solid fundamentals in profitability, financial health, and growth. The company operates acute care hospitals and behavioral health facilities across the U.S. and internationally, positioning it as a key player in the healthcare sector.

Valuation

The stock stands out with a Valuation Rating of 9/10, indicating it is priced attractively relative to its fundamentals:

• P/E Ratio of 9.62 – Well below both the industry average (36.56) and the S&P 500 (26.32).
• Forward P/E of 7.90 – Suggests earnings growth is not yet fully reflected in the stock price.
• Enterprise Value/EBITDA and Price/Free Cash Flow ratios are cheaper than 85% of industry peers.

Profitability

UHS earns a Profitability Rating of 7/10, supported by:

• Return on Assets (8.05%) and Return on Equity (17.64%) – Both rank in the top 15% of the industry.
• Operating Margin of 10.87% – Better than 82% of competitors.
• Consistent profitability over the past five years, with stable cash flow generation.

Financial Health

With a Health Rating of 5/10, the company shows manageable leverage but some areas to monitor:

• Debt/Equity Ratio of 0.68 – In line with industry norms, indicating moderate reliance on debt.
• Current Ratio of 1.32 – Suggests sufficient liquidity to cover short-term obligations.
• Share count has decreased over the past five years, a positive sign for shareholder value.

Growth

The Growth Rating of 5/10 reflects steady but not explosive expansion:

• EPS grew 49.29% YoY, with a 10.74% annualized growth rate over five years.
• Revenue increased 9.73% in the past year, though future growth is expected to moderate (~4.49% annually).

Dividend

While not a high-yielder, UHS offers a Dividend Rating of 6/10:

• Dividend yield of 0.46%, but payout ratios are sustainable (4.45% of income).
• 6.27% annual dividend growth over time, supported by earnings growth.

Our Decent Value screener lists more stocks with strong valuations and solid fundamentals.
For a deeper dive, review the full fundamental report on UHS.

Disclaimer

This is not investment advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.