Acadia Healthcare Co (ACHC:NAS) Fundamental Valuation Report


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Acadia Healthcare Co $38.06 (USD) Close Price as of 27/02/2018

Based on the analysis conducted in this report, Acadia Healthcare Co, (ACHC:NAS) is found to be  Undervalued.

Company Acadia Healthcare Co
Symbol:Exchange ACHC:NAS
Industry Healthcare:Medical Care
Close Price/Date $38.06 (USD) 27/02/2018
Weighted Average Valuation $40.18 (USD)
Summary ACHC:NAS is found to be  Undervalued by 5.6% using the 2 valuation models shown below.
Valuation Models Used Analyst Consensus: $38.67 (USD)
(in order of importance) Discounted Cash Flow: $42.46 (USD)
Valuation Methods Analysis This company is:
Cash Flow Basis: Undervalued on a Cash Flow Valuation basis
Comparable Company Basis: Undervalued on a Comparable Valuation basis
Asset Basis: Undervalued on an Asset Valuation basis

Valuation Details

Acadia Healthcare Co Valuations

Summary chart

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for ACHC:NAS

Using a discounted cash flow model we generated an intrinsic value of $42.46 (USD) for ACHC:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

ACHC:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $42.46 1% 5% 1% 5%
WACC (or Ke) 5.69 $63.82 $28.24
Terminal Growth Rate 0.70 $29.54 $61.85
Tax Rate 0.40 $49.86 $35.06
Cash Flow 689,190,800 $37.88 $47.04
Capital Expenditures -25,726,000 $42.29 $42.63
Long Term Debt 3,661,477,000 $44.54 $40.38

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $71.59 (USD) for ACHC:NAS. We also generated a valuation of $51.68 (USD) using other metrics and comparables.
The comparable companies were AMN Healthcare Services (AMN:NYS), LifePoint Health (LPNT:NAS), Tenet Healthcare (THC:NYS), Tivity Health (TVTY:NAS) and Universal Health Services (UHS:NYS)

Company ACHC:NAS End Date Value
Earnings/Share $2.30 (USD)
Book Value/Share $28.32 (USD)
Sales/Share $32.27 (USD)
Cash Flow/Share $4.28 (USD)
EBITDA/Share $0.00 (USD)
Price Based on Comps Adjustment Factor (%)
$46.76 (USD) 0.0
$98.10 (USD) 16.2
$38.44 (USD) 96.1
$50.23 (USD) 0.0
$0.00 (USD) 31.1
ACHC:NAS Ratios Used Average Values AMN:NYS LPNT:NAS THC:NYS TVTY:NAS UHS:NYS
19.13 PE Ratio 20.33 21.14 18.65 0.00 25.39 16.15
1.34 PB Ratio 3.46 4.80 0.81 0.00 5.95 2.29
1.18 PS Ratio 1.19 1.41 0.30 0.11 3.02 1.11
8.90 PCF Ratio 11.74 24.29 4.05 1.74 17.53 11.08
12.44 EV to EBITDA 10.23 12.28 6.78 9.14 13.94 9.01

Multiples

Using a multiples approach we generated a valuation of  $77.33 (USD) for ACHC:NAS

Company ACHC:NAS End Date Value
Earnings/Share $2.30 (USD)
Book Value/Share $28.32 (USD)
Sales/Share $32.27 (USD)
Cash Flow/Share $4.28 (USD)
EBITDA/Share $6.11 (USD)
Price Based on Comps Adjustment Factor
$87.16 (USD) 0
$62.97 (USD) 0
$63.85 (USD) 0
$63.63 (USD) 0
$109.04 (USD) 0
Ratios Ratio Average
PE Ratio 37.89
PB Ratio 2.22
PS Ratio 1.98
PCF Ratio 14.87
EV to EBITDA 17.85

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ACHC:NAS for the last 7 years was  2.25

We ran the Adjusted Book Value for  ACHC:NAS and generated a book value of  $28.70 (USD)
By multiplying these we get an adjusted valuation of  $64.49 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for ACHC:NAS. The 3 analysts have a concensus valuation for ACHC:NAS for 2018 of $38.67 (USD).

ACHC:NAS Acadia Healthcare Co

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 3 0 3.5000 Hold 2018-2-26

Current Price: not available

Analyst Consensus
USD Millions 2017 2018 2019
Mean EPS 2.29 2.46 2.80
# EPS Analysts 4 4 3
Mean Revenue 2,829.30 2,998.10 3,197.80
# Revenue Analysts 3 3 3
Mean Target Price 38.67
Mean Cash Flow 3.96 4.49 5.00
Mean EBITDA 595.80 631.80 684.40
Mean Net Income 196.90 226.30 263.20
Mean Debt Outstanding 3,156.00 3,058.90 2,930.10
Mean Tax Rate 24.45 18.90 18.80
Mean Growth Rate
Mean Capital Expenditure 270.20 297.90 314.20

Company Overview (ACHC:NAS USD)

Price 38.06
Range 37.91 – 39.20
52 week 27.79 – 53.00
Open 38.51
Vol / Avg. 951756/639544
Mkt cap 3.31B
P/E 19.13
Div/yield 0.00/0.00
EPS 2.30
Shares 87.05M
Beta 1.18
Summary chart

Detailed Company Description

Acadia Healthcare Company Inc operates mental healthcare facilities in the United States. It addresses behavioral abnormalities through psychiatric facilities, substance abuse facilities and residential treatment centers.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

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