THC

Based on a comprehensive review, Tenet Healthcare (THC) presents a mixed but cautiously optimistic profile for investors.

From a fundamental perspective, THC shows encouraging signs with improving quarterly net income and a solid profit margin of 6.5%. Its financial health is stable, supported by adequate liquidity and manageable debt levels. The modest price-to-sales ratio of 1.11 and a PEG ratio below 1 suggest the stock may be reasonably priced relative to its growth prospects. However, investors should be mindful of its high operational valuation (EV/EBITDA of 31.57) and modest asset efficiency.

Technically, the stock is in a strong recovery trend but is currently trading near its 52-week high, indicating potential for a near-term pullback. Its high beta of 1.41 also signifies greater volatility than the market, which adds risk.

Buy Recommendation: THC is a candidate for a buy-and-hold position for investors comfortable with moderate risk. The positive earnings momentum and reasonable valuation on certain metrics provide a solid foundation. However, given its technical overbought condition and high volatility, entering on a pullback would be a more prudent strategy to mitigate short-term downside risk. This is not investment advice, for reference only.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for Tenet Healthcare (THC):

The outlook is cautiously optimistic, driven by catalysts such as continued positive earnings momentum, operational efficiencies supporting its solid profit margin, and a valuation that appears reasonable based on its growth (PEG ratio <1). Key risks include the stock's high volatility (beta of 1.41), its technically overbought state trading near 52-week highs, and a demanding operational valuation (EV/EBITDA of 31.57) which could limit upside if growth slows. While no specific analyst target is provided, a prudent strategy would be to target an entry point below the current price on a pullback, with an expectation for modest appreciation over the 12-month period if the fundamental improvements continue.

Wall Street Consensus

Most Wall Street analysts are optimistic about THC's 12-month outlook, with consensus target around $195.19, indicating expected upside potential.

Overall, THC has investment potential but also faces challenges. Here are key factors to weigh before investing.

Of course. Here is the technical analysis of THC's price performance.

Overall Assessment THC has demonstrated a strong recovery over the past year, nearly doubling from its 52-week low; however, its recent performance indicates lagging momentum compared to the broader market.

Short-term Performance While THC shows positive returns over the past one and three months, its relative strength figure of -1.14% indicates it has slightly underperformed the market benchmark during this period. The stock's high beta of 1.41 confirms it is significantly more volatile than the market, meaning its gains and losses are amplified.

Current Position Trading at $199.19, THC is positioned in the upper-middle portion of its 52-week range ($109.82 - $222.82), approximately 76% of the way to its high. Given its proximity to the yearly peak and the significant 23.84% maximum drawdown from that high, the stock appears to be in a technically overbought zone and may be vulnerable to a pullback.

Revenue & Profitability THC achieved modest revenue growth to $5.29 billion in Q3 versus $5.27 billion in Q2, while net income improved significantly to $342 million from $288 million quarter-over-quarter. The net profit margin expanded from 5.5% to 6.5%, indicating better cost control despite a sequential decline in gross margin primarily due to cost reclassification in operating expenses. Overall profitability trends remain positive with improved bottom-line performance.

Financial Health The company maintains a balanced debt profile with a debt ratio of 45% and an interest coverage ratio of 4.3x, indicating adequate debt servicing capacity. However, the cash flow to debt ratio of 0.08 suggests moderate cash generation relative to debt obligations, while healthy current and quick ratios above 1.6 demonstrate strong short-term liquidity positioning.

Operational Efficiency THC's operational efficiency shows room for improvement, with ROE at 8.5% and asset turnover of 0.18 reflecting modest capital utilization. The 64-day sales outstanding period indicates relatively slow collections, though efficient inventory management is evidenced by high inventory turnover. The company's cash conversion cycle of 23 days demonstrates reasonable working capital efficiency.

Valuation Level

THC appears reasonably valued relative to its earnings, with a trailing PE of 10.22 suggesting potential undervaluation compared to broader market averages. However, the forward PE of 13.05 indicates expected earnings growth is already being priced in. Key concerns arise from the elevated price-to-book ratio of 3.03, which implies the market values the company significantly above its net asset value, and the high EV/EBITDA of 31.57, which signals that the enterprise value is rich relative to its operational cash flow. The price-to-sales ratio of 1.11 appears modest, while the PEG ratio below 1 (0.57) points to the stock being undervalued when factoring in its growth prospects.

Peer Comparison

A precise peer comparison cannot be conducted as the specific industry average data was not provided in the query. Typically, assessing whether the PE of ~10-13, PB of 3.03, and PS of 1.11 are attractive would require benchmarking against the average multiples for the healthcare facilities or specific sector in which THC operates. The notably high EV/EBITDA ratio would be a critical point of analysis against industry peers to determine if it is an outlier or in line with sector standards for valuation based on cash flow.

The stock exhibits elevated volatility risk, evidenced by a beta of 1.41 indicating it is 41% more volatile than the broader market. This heightened sensitivity is further confirmed by a significant one-year maximum drawdown of -23.84%, suggesting potential for substantial price declines during market downturns.

Other risks appear more contained based on the provided data. A lack of reported short interest implies minimal speculative pressure or negative sentiment from short sellers. However, an absence of liquidity metrics makes it difficult to fully assess the potential for price impact during large trades.