Sporting a Zacks Rank #1 (Strong Buy) and landing the Bull of the Day, HCA Healthcare’s stock (HCA) has soared over +30% this year.
As the largest non-governmental operator of acute care hospitals in the United States, it’s noteworthy that HCA’’s Zacks Medical-Hospital Industry is currently in the top 1% of over 250 Zacks industries.
Keeping its vibrant business industry in mind, the rally in HCA could continue considering the company’s reasonable valuation and attractive growth trajectory.
HCA’s Compelling Growth
Operating over 186 hospitals and approximately 2,400 ambulatory sites, HCA has continued to capitalize on its position as an urgent care leader. HCA’s leadership among hospitals has made its services a preferred choice among patients seeking treatment for severe injuries or illnesses related to urgent medical conditions.
On a same-facilities basis, HCA saw a 5% uptick during the second quarter in inpatient admissions, equivalent admissions, and emergency room visits. With HCA’s operations seeing a steady increase across the board, its total sales are now projected to rise 9% in fiscal 2024 and are slated to increase another 5% in FY25 to $74.25 billion.
More impressive has been HCA’s execution which has centered around a strategic plan to produce positive outcomes for patients while enhancing its facilities including better throughput and case management.
This has fueled HCA’s increased profitability with annual earnings expected to spike 17% this year and projected to rise another 10% in FY25 to $24.55 per share.
HCA’s Attractive Valuation
Making HCA’s robust top and bottom lines stand out even more is its valuation. To that point, HCA trades near the optimum level of less than 1X sales. Furthermore, HCA trades at a 16.8X forward earnings multiple which is roughly on par with its industry average of 16.5X and a noticeable discount to the S&P 500’s 23.6X.
HCA’s Dividend
What may further attract investors to HCA’s compelling growth is that the company has also rewarded shareholders by increasing its dividend.
HCA has a modest 0.71% annual dividend yield at $2.64 per share but has increased its payout six times in the last five years for an annualized growth rate of 14.7%. Plus, HCA’s 13% payout ratio suggests there is more than enough room for future dividend hikes.
Bottom Line
HCA shares have now risen over +200% in the last five years and the impressive price performance looks set to continue given the medical leader’s attractive outlook and reasonable valuation. This combined with an increasing dividend makes HCA a very viable option to keep in the portfolio for both growth and value.
–Shaun Pruitt
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Source: Zacks