Community Health Systems (CYH:NYS) Fundamental Valuation Report


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Community Health Systems $4.85 (USD) Close Price as of 06/03/2018

Based on the analysis conducted in this report, Community Health Systems, (CYH:NYS) is found to be  Undervalued.

Company Community Health Systems
Symbol:Exchange CYH:NYS
Industry Healthcare:Medical Care
Close Price/Date $4.85 (USD) 06/03/2018
Weighted Average Valuation $5.50 (USD)
Summary CYH:NYS is found to be  Undervalued by 13.4% using the 1 valuation models shown below.
Valuation Models Used Analyst Consensus: $5.50 (USD)
(in order of importance)
Valuation Methods Analysis This company is:
Cash Flow Basis: Overvalued on a Cash Flow Valuation basis
Comparable Company Basis: Undervalued on a Comparable Valuation basis
Asset Basis: Overvalued on an Asset Valuation basis

Valuation Details

Community Health Systems 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 CYH:NYS

Using a discounted cash flow model generates a negative intrinsic value due to one of 1) zero or negative projected cash flows 2) excessive capital expenditures or 3) excessive debt to calculated equity value for CYH:NYS. We have not shown the calculated value here for that reason.

Sensitivity Analysis

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

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $6.35 (USD) for CYH:NYS. We also generated a valuation of $10.85 (USD) using other metrics and comparables.
The comparable companies were Almost Family (AFAM:NAS), LHC Group (LHCG:NAS), LifePoint Health (LPNT:NAS), Providence Service (PRSC:NAS) and US Physical Therapy (USPH:NYS)

Company CYH:NYS End Date Value
Cash/Share $5.04 (USD)
Book Value/Share ($6.69) (USD)
MarketCap 555,941,667
1 Year Return -0.508
NetPPE 7,052,000,000
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0
($14.28) (USD) 0
$10.16 (USD) 0
$11.54 (USD) 0
$0.00 (USD) 0
Ratios Used Average Values AFAM:NAS LHCG:NAS LPNT:NAS PRSC:NAS USPH:NYS
Cash / Share 0.75 0.85 0.16 2.73 0.00 0.00
Book Value / Share 29.03 30.71 22.68 56.57 19.98 15.20
Market Cap 1,135,806,872 743,745,457 1,140,385,247 2,247,461,797 711,089,315 836,352,542
1 Year Return 0.17 0.15 0.26 -0.26 0.58 0.12
Net PPE 1,050,666,333 15,246,000 46,453,000 3,090,300,000 0 0

Multiples

Using a multiples approach we generated a valuation of  $9.67 (USD) for CYH:NYS

Company CYH:NYS End Date Value
Earnings/Share ($22.00) (USD)
Book Value/Share ($6.69) (USD)
Sales/Share $137.36 (USD)
Cash Flow/Share $6.92 (USD)
EBITDA/Share ($9.22) (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$0.00 (USD) 0
$10.15 (USD) 0
$9.18 (USD) 0
$0.00 (USD) 0
Ratios Ratio Average
PE Ratio 16.42
PB Ratio 0.63
PS Ratio 0.07
PCF Ratio 1.33
EV to EBITDA 10.56

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  CYH:NYS for the last 10 years was  0.68

We ran the Adjusted Book Value for  CYH:NYS and generated a book value of  ($6.69) (USD)
By multiplying these we get an adjusted valuation of  ($4.53) (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for CYH:NYS. The 4 analysts have a concensus valuation for CYH:NYS for 2018 of $5.50 (USD).

CYH:NYS Community Health Systems

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 3 1 3.0000 Hold 2018-3-5

Current Price: not available

Analyst Consensus
USD Millions 2018 2019 2020
Mean EPS -1.23 -0.56 0.11
# EPS Analysts 5 4 1
Mean Revenue 13,965.60 13,791.70 13,280.00
# Revenue Analysts 4 4 1
Mean Target Price 5.50
Mean Cash Flow 7.26 7.81
Mean EBITDA 1,623.30 1,634.40
Mean Net Income -151.60 -66.80 13.00
Mean Debt Outstanding 12,316.10 12,170.80
Mean Tax Rate 36.60 229.73 61.70
Mean Growth Rate
Mean Capital Expenditure 577.60 667.90

Company Overview (CYH:NYS USD)

Price 4.85
Range 4.72 – 4.98
52 week 3.97 – 10.32
Open 4.74
Vol / Avg. 2.8M/1.72M
Mkt cap 556.09M
P/E 0.00
Div/yield 0.00/0.00
EPS -22.00
Shares 114.66M
Beta 1.57
Summary chart

Detailed Company Description

Community Health Systems Inc is a operators of general acute care hospitals. The company operates in hospital operations which includes its general acute care hospitals and related healthcare entities.

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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