Buy or Sell PACS Stock?
PACS (PACS) stock has jumped 5.5% during the past day, and is currently trading at $40.80. We believe there are only a couple of things to fear in PACS stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | High |
| What you get: | |
| Growth | Very Strong |
| Profitability | Very Weak |
| Financial Stability | Moderate |
| Downturn Resilience | N/A |
| Operating Performance | Strong |
| Stock Opinion | Fairly Priced |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $6.4 Bil in market cap, PACS provides high-quality skilled nursing care through independently operated facilities, with licensed subsidiaries delivering all healthcare services under professional direction and control.
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[1] Valuation Looks High
| PACS | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 1.2 | 3.4 |
| Price-to-Earnings Ratio | 37.8 | 25.2 |
| Price-to-Free Cash Flow Ratio | 25.1 | 21.7 |
This table highlights how PACS is valued vs broader market.
[2] Growth Is Very Strong
- PACS has seen its top line grow at an average rate of 37.6% over the last 3 years
- Its revenues have grown 38% from $3.7 Bil to $5.1 Bil in the last 12 months
- Also, its quarterly revenues grew 31.0% to $1.3 Bil in the most recent quarter from $1.0 Bil a year ago.
| PACS | S&P 500 | |
|---|---|---|
| 3-Year Average | 37.6% | 5.6% |
| Latest Twelve Months* | 37.6% | 6.5% |
| Most Recent Quarter (YoY)* | 31.0% | 7.5% |
This table highlights how PACS is growing vs broader market.
[3] Profitability Appears Very Weak
- PACS last 12 month operating income was $287 Mil representing operating margin of 5.6%
- With cash flow margin of 9.2%, it generated nearly $472 Mil in operating cash flow over this period
- For the same period, PACS generated nearly $169 Mil in net income, suggesting net margin of about 3.3%
| PACS | S&P 500 | |
|---|---|---|
| Current Operating Margin | 5.6% | 18.8% |
| Current OCF Margin | 9.2% | 20.7% |
| Current Net Income Margin | 3.3% | 12.8% |
This table highlights how PACS profitability vs broader market.
[4] Financial Stability Looks Moderate
- PACS Debt was $3.5 Bil at the end of the most recent quarter, while its current Market Cap is $6.4 Bil. This implies Debt-to-Equity Ratio of 54.3%
- PACS Cash (including cash equivalents) makes up $356 Mil of $5.6 Bil in total Assets. This yields a Cash-to-Assets Ratio of 6.3%
| PACS | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 54.3% | 20.2% |
| Current Cash-to-Assets Ratio | 6.3% | 7.2% |
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