Pennant Group, Inc. (NASDAQ: PNTG)

Sector: Healthcare Industry: Medical Care Facilities CIK: 0001766400
Market Cap 1.00 Bn
P/B 3.11
P/E 37.47
P/S 1.18
ROIC (Qtr) 4.93
Div Yield % 0.00
Rev 1y % (Qtr) 26.76
Total Debt (Qtr) 302.81 Mn
Debt/Equity (Qtr) 0.94

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 47.91M provides exceptional 11.76x coverage of interest expenses 4.08M, showing strong debt service capability.
  • Robust free cash flow of 36.10M exceeds capital expenditure of 11.80M by 3.06x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 470.65M provides 101.90x coverage of working capital 4.62M, indicating strong operational backing.
  • Tangible assets of 470.65M provide robust 7.16x coverage of other current liabilities 65.75M, indicating strong asset backing.
  • Operating cash flow of 47.91M fully covers other non-current liabilities 20.40M by 2.35x, showing strong long-term stability.

Bear case

  • Operating cash flow of 47.91M barely covers its investment activities of (79.35M), with a coverage ratio of -0.60, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 2.34M provide limited coverage of acquisition spending of (65.07M), which is -0.04x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 36.10M represents just -0.42x of debt issuance (86.86M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High financing cash flow of 29.31M relative to working capital of 4.62M, which is 6.35x suggests concerning dependence on external funding for operational needs.
  • Cash position of 2.34M provides weak coverage of payables of 21.63M, which is 0.11x, indicating potential working capital stress and supplier relationship risks.

Peer comparison

Companies in the Medical Care Facilities
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 HCA HCA Healthcare, Inc. 114.88 Bn 18.11 1.54 46.35 Bn
2 THC Tenet Healthcare Corp 18.07 Bn 13.34 0.87 13.19 Bn
3 UHS Universal Health Services Inc 14.64 Bn 10.65 0.86 5.11 Bn
4 FMS Fresenius Medical Care AG 14.10 Bn 16.69 0.61 14.98 Bn
5 EHC Encompass Health Corp 12.55 Bn 19.95 2.17 2.66 Bn
6 ENSG Ensign Group, Inc 10.08 Bn 30.72 2.09 2.16 Bn
7 DVA Davita Inc. 8.90 Bn 11.53 0.67 12.78 Bn
8 CHE Chemed Corp 6.38 Bn 22.87 2.52 0.14 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.73 1.26
EV to Cash from Ops. EV/CFO 27.22 12.78
EV to Debt EV to Debt 4.31 12.10
EV to EBIT EV/EBIT 31.95 10.74
EV to EBITDA EV/EBITDA 25.24 16.04
EV to Free Cash Flow [EV/FCF] EV/FCF 36.12 18.02
EV to Market Cap EV to Market Cap 1.30 432.64
EV to Revenue EV/Rev 1.54 2.77
Price to Book Value [P/B] P/B 3.12 -1.92
Price to Earnings [P/E] P/E 37.64 5.13
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.10
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -13.44
Dividend per Basic Share Div per Share (Qtr) 0.00 0.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 5.42
Interest Coverage Int. cover (Qtr) 10.02 -97.94
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -46.99 -114.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -47.67 65.22
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.97
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 9.36 -46.98
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 22.84 75.97
EBIT Growth (1y) % EBIT 1y % (Qtr) 14.13 -61.19
EBT Growth (1y) % EBT 1y % (Qtr) 31.75 -115.48
EPS Growth (1y) % EPS 1y % (Qtr) 11.43 -24.32
FCF Growth (1y) % FCF 1y % (Qtr) 127.35 309.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 32.90 17.88
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.12 1.04
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 0.02 0.39
Current Ratio Curr Ratio (Qtr) 1.04 1.39
Debt to Equity Ratio Debt/Equity (Qtr) 0.94 -13.19
Interest Cover Ratio Int Coverage (Qtr) 10.02 -97.94
Times Interest Earned Times Interest Earned (Qtr) 10.02 -97.94
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.80 -95.81
EBIT Margin % EBIT Margin % (Qtr) 4.82 -94.97
EBT Margin % EBT Margin % (Qtr) 4.34 -105.60
Gross Margin % Gross Margin % (Qtr) 13.70 23.31
Net Profit Margin % Net Margin % (Qtr) 3.20 -106.14