Tenet Healthcare Gains 26.9% in a Year: Is It the Right Time to Invest?

Core Viewpoint - Tenet Healthcare Corporation (THC) has shown significant stock performance, with a 26.9% increase over the past year, outperforming the industry and broader market indices [1] Financial Performance - Tenet Healthcare's market capitalization stands at $12.7 billion, with a closing stock price of $133.04 [1] - The company generated $1.1 billion in free cash flow over the trailing 12 months, with a price-to-free cash flow ratio of 11.43X, lower than the medical sector average of 21.57X, indicating strong financial stability [5] - Tenet Healthcare ended the fourth quarter with $3 billion in cash and cash equivalents, more than double its year-end 2023 balance, while long-term debt decreased by 12.1% to $13.1 billion [6] - The net debt-to-EBITDA ratio improved to 2.61X, significantly below its five-year median of 4.64X and the industry average of 3.29X [7] Growth Drivers - The company is focusing on expanding its ambulatory surgery centers through collaboration with United Surgical Partners International (USPI), which operates 518 ASCs and 25 surgical hospitals across 37 states [3] - Investments in AI-driven technologies aim to enhance clinical and administrative processes, reduce costs, and improve patient satisfaction [4] Valuation - Tenet Healthcare's forward price-to-earnings ratio is 10.72X, lower than its five-year median of 11.94X and the industry average of 12.34X, indicating it is relatively undervalued compared to peers [8] Earnings Estimates - The Zacks Consensus Estimate for 2025 adjusted earnings is $12.15 per share, with upward revisions in the past 30 days, and a projected 10.5% growth for 2026 [11]