HCSG
Healthcare Services Group, Inc.
$20.43
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 33.2% above fair value
You pay
$20.43
Bear
$12.28
Fair
$15.33
Bull
$18.41
Bear
$12.28
-39.9%
$0.82 × 12x P/E
Fair
$15.33
-24.9%
$0.82 × 15x P/E
Bull
$18.41
-9.9%
$0.82 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
25.0x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $24.50 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $15.33 per share.
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 $24.50 (from 15 analysts). Our estimate is 50% 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