Acadia Healthcare Co (ACHC:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Acadia Healthcare Co(ACHC:NAS)

Healthcare:Medical Care Facilities

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$28.26 (USD) 09/25/2020

Weighted Valuation
$32.00 (USD)

Overall Rating
Undervalued by 13.2%

Valuation Models Comparables: $64.13 (USD)
(in order of importance) Adjusted Book Value: $43.97 (USD)
Multiples: $44.41 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation
According to Analyst consensus at $32.00 this stock is Undervalued

Company Overview (ACHC:NAS USD)

Price 28.26
Range 27.21 – 28.36
52 week 11.78 – 35.04
Open 27.21
Vol / Avg. 233762/494584
Mkt cap 2.51B
P/E 23.55
Div/yield 0.00/0.00
EPS 1.24
Shares 88.96M
Beta 1.42

Company Description

Acadia Healthcare Co Inc acquires and develops behavioral healthcare facilities in the United States, United Kingdom, and Puerto Rico. Acute inpatient psychiatric facilities and specialty treatment facilities contribute the vast majority of Acadia’s revenue in the United States. The U.S. facilities receive the largest proportion of payments from Medicaid, with the second largest proportion from commercial payors. In the United Kingdom, the majority of Acadia’s revenue comes from its healthcare facilities, and virtually all of the payment received is from the National Health Service.

Valuation Details

 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 $76.01 (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: $76.01 1% 5% 1% 5%
WACC (or Ke) 6.56 $105.92 $56.15
Terminal Growth Rate 1.60 $57.91 $103.25
Tax Rate 0.19 $83.46 $68.56
Cash Flow 710,996,800 $69.83 $82.18
Capital Expenditures -21,748,600 $75.84 $76.18
Long Term Debt 3,661,477,000 $78.07 $73.95

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $85.41 (USD) for ACHC:NAS. We also generated a valuation of $64.13 (USD) using other metrics and comparables.
The comparable companies were Option Care Health (OPCH:NAS), LHC Group (LHCG:NAS), Providence Service (PRSC:NAS), Amedisys (AMED:NAS) and Tivity Health (TVTY:NAS).

Company ACHC:NAS End Date Value
Earnings/Share $1.20 (USD)
Book Value/Share $28.14 (USD)
Sales/Share $35.10 (USD)
Cash Flow/Share $5.33 (USD)
EBITDA/Share $5.53 (USD)
Price Based on Comps Adjustment Factor (%)
$68.23 (USD) 0.0
$97.92 (USD) -27.8
$61.46 (USD) 53.8
$29.03 (USD) 18.9
$0.00 (USD) 2.7
ACHC:NAS Ratios Used Average Values OPCH:NAS LHCG:NAS PRSC:NAS AMED:NAS TVTY:NAS
23.55 PE Ratio 56.86 0.00 53.52 0.00 60.20 0.00
1.00 PB Ratio 7.73 2.73 4.34 3.38 10.47 17.73
0.81 PS Ratio 1.75 0.42 3.08 0.79 3.91 0.56
5.30 PCF Ratio 13.31 14.58 12.48 6.07 29.34 4.06
12.80 EV to EBITDA 26.82 32.78 26.31 15.68 32.49 0.00

Multiples

Using a multiples approach we generated a valuation of  $44.41 (USD) for ACHC:NAS

Company ACHC:NAS End Date Value
Earnings/Share $1.20 (USD)
Book Value/Share $28.14 (USD)
Sales/Share $35.10 (USD)
Cash Flow/Share $5.33 (USD)
EBITDA/Share $5.53 (USD)
Price Based on Comps Adjustment Factor
$28.25 (USD) 0
$39.02 (USD) 0
$39.13 (USD) 0
$45.98 (USD) 0
$69.67 (USD) 0
Ratios Ratio Average
PE Ratio 23.54
PB Ratio 1.39
PS Ratio 1.11
PCF Ratio 8.63
EV to EBITDA 12.59

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ACHC:NAS for the last 9 years was  1.54

We ran the Adjusted Book Value for  ACHC:NAS and generated a book value of  $28.54 (USD)
By multiplying these we get an adjusted valuation of  $43.97 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for ACHC:NAS. The 2 analysts have a concensus valuation for ACHC:NAS for 2021 of $32.00 (USD).

ACHC:NAS Acadia Healthcare Co

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 2 0 3.6667 Outperform 2020-9-24

Current Price: 28.26 USD

Analyst Consensus
USD Millions 2020 2021 2022
Mean EPS 2.15 2.68 2.75
# EPS Analysts 3 3 2
Mean Revenue 3,230.00 3,428.20 3,602.50
# Revenue Analysts 2 2 2
Mean Target Price 32.00
Mean Cash Flow 4.43 4.67 4.89
Mean EBITDA 587.70 654.00 699.80
Mean Net Income 194.40 236.10 246.30
Mean Debt Outstanding 2,942.10 2,841.30 2,727.00
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure 329.70 332.30 340.40

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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