Surgery Partners Stock: Strong Cash Flow Poised for a Re-Rating?
We think Surgery Partners (SGRY) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.
What Is Happening With SGRY
SGRY is down 0.0% so far this year and is now available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to a shift in payer mix and softer commercial volume, alongside timing impacts from capital deployment and asset divestitures. These factors led to a downward revision of full-year revenue and Adjusted EBITDA guidance for 2025.
The stock may not reflect it yet, but here is what’s going well for the company: Surgery Partners achieved 7.7% year-to-date revenue growth, driven by a 4.3% increase in same-facility cases and strong orthopedic growth. The company added 500 new physicians focusing on high-acuity care. Operating cash flow grew to $83.6 million in Q3 2025, demonstrating strong cash flow. Its net debt to EBITDA was 4.2x, with active portfolio optimization targeting leverage reduction and further growth.
SGRY Has Strong Fundamentals
- Buying FTNT at a Discount? You Are Getting Paid to Do It
- Catalysts That Could Propel Tesla Stock to the Moon
- Palantir Technologies Stock on the Edge: 3 Threats You Need to Know
- Visa Stock Pullback: A Chance to Ride the Uptrend
- Has Constellation Brands Stock Quietly Become a Value Opportunity?
- Micron Technology Stock To $248?
- Cash Yield: Surgery Partners offers an impressive cash flow yield of 9.9%.
- Growing: Revenue growth of 10.1% over the last twelve months means that the cash pile is going to grow.
- Valuation Discount: SGRY stock is currently trading at 33% below its 3-month high, 40% below its 1-year high, and 56% below its 2-year high.
Below is a quick comparison of SGRY fundamentals with S&P medians.
| SGRY | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Health Care Facilities | – |
| Free Cash Flow Yield | 9.9% | 4.1% |
| Revenue Growth LTM | 10.1% | 6.2% |
| Operating Margin LTM | 15.2% | 18.8% |
| PS Ratio | 0.6 | 3.2 |
| PE Ratio | -11.5 | 23.4 |
| Discount vs 3-Month High | -32.7% | -5.8% |
| Discount vs 1-Year High | -40.3% | -10.3% |
| Discount vs 2-Year High | -55.9% | -13.2% |
*LTM: Last Twelve Months
But What About The Risk Involved?
While SGRY stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. SGRY fell about 77% in the 2018 correction, just shy of a 76% drop during the Covid pandemic, and took a 67% hit in the inflation shock. These aren’t small dips by any measure. Even with all the positives around this stock, the downside risk during major market sell-offs is pretty clear. Good fundamentals matter, but when the market turns sharply, big losses happen here too. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read SGRY Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Other Stocks Like SGRY
Not ready to act on SGRY? You could consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Positive revenue growth
- High free cash flow yield
- Meaningful discount to 3M, 1Y, and 2Y highs
A portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:
- Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
- Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods
The Best Investors Think In Portfolios
Individual stocks are unpredictable. A smart portfolio keeps you invested, limits downside shocks, and provides upside exposure
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.