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Is It Time To Consider Buying Universal Health Services, Inc. (NYSE:UHS)?

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  • UHID
  • UHS

Today we're going to take a look at the well-established Universal Health Services, Inc. (NYSE:UHS). The company's stock saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Universal Health Services’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Universal Health Services

Is Universal Health Services still cheap?

According to my valuation model, Universal Health Services seems to be fairly priced at around 7.96% above my intrinsic value, which means if you buy Universal Health Services today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $140.65, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Universal Health Services’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Universal Health Services generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 1.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Universal Health Services, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in UHS’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on UHS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 2 warning signs for Universal Health Services and we think they deserve your attention.

If you are no longer interested in Universal Health Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.