HCSG
Healthcare Services Group, Inc.
$20.96
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 72.5% above fair value
You pay
$20.96
Bear
$9.72
Fair
$12.15
Bull
$14.58
Bear
$9.72
-53.6%
$0.81 × 12x P/E
Fair
$12.15
-42.0%
$0.81 × 15x P/E
Bull
$14.58
-30.4%
$0.81 × 18x P/E
Adjust Assumptions
15.0x
0.81$
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
25.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$26.00
Divergence from AlphaVal
53%
Summary
Applying a 15x P/E to adjusted EPS of $0.81, the base-case value is $12.15 per share. DDM cross-check: $14.53.
Warnings
The company pays out 105% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $26.00 (from 15 analysts). Our estimate is 53% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples