PNTG
The Pennant Group, Inc.
$40.50
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 129.7% above fair value
You pay
$40.50
Bear
$1.73
Fair
$17.63
Bull
$37.33
Bear
$1.73
-95.7%
12% stage 1 growth, 11% discount
Fair
$17.63
-56.5%
19% stage 1 growth, 11% discount
Bull
$37.33
-7.8%
25% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (19% base case)
Terminal Value % of EV
46%
Implied Market Multiple
94.1x
Market is pricing in (growth)
29.7%
vs 19.4% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $40.00 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $17.63 per share.
Warnings
Stock-based employee pay equals 30% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $40.00 (from 7 analysts). Our estimate is 70% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions