SEM
Select Medical Holdings Corporation
$16.51
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 29.7% below fair value
You pay
$16.51
Bear
$18.78
Fair
$23.47
Bull
$28.16
Bear
$18.78
+13.7%
$1.66 × 12x P/E
Fair
$23.47
+42.2%
$1.66 × 15x P/E
Bull
$28.16
+70.6%
$1.66 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
9.9x
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 $17.75 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $23.47 per share.
Warnings
The company's reported profits differ from official accounting profits by 41%. Check what costs are being left out of the adjusted number.
Wall Street's average price target is $17.75 (from 14 analysts). Our estimate is 40% above 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