When Universal Health Services Inc (NYSE:UHS) announced its most recent earnings (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Universal Health Services has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see UHS has performed. View our latest analysis for Universal Health Services
How Well Did UHS Perform?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method enables me to examine many different companies in a uniform manner using the latest information. For Universal Health Services, the latest twelve-month earnings is $707M, which, relative to last year’s level, Since these values are somewhat myopic, I’ve determined an annualized five-year value for UHS’s net income, which stands at $527M. This shows that, generally, Universal Health Services has been able to grow its earnings over the last few years.
What’s the driver of this growth? Well, let’s take a look at whether it is solely attributable to industry tailwinds, or if Universal Health Services has experienced some company-specific growth. Over the past couple of years, Universal Health Services expanded its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Scanning growth from a sector-level, the US healthcare providers and services industry has been growing its average earnings by double-digit 11.79% over the past year, and a more subdued 7.72% over the past couple of years. This shows that any uplift the industry is benefiting from, Universal Health Services has not been able to realize the gains unlike its average peer.
What does this mean?
Universal Health Services’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Universal Health Services gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Universal Health Services to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for UHS’s future growth? Take a look at our free research report of analyst consensus for UHS’s outlook.
2. Financial Health: Is UHS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.