Premier (PINC) has been steadily rising, drawing investor interest after a recent period of solid stock performance. Over the past month, shares are up by 5%, with returns even stronger over the past 3 months.
Premier’s strong share price return of 33% over the past three months has sparked investor optimism, especially with its year-to-date gain now north of 31%. Total shareholder return for the past twelve months comes in at an impressive 50%, suggesting that recent momentum is more than just a short-term bounce. While the three- and five-year total returns have not kept pace, the latest price action hints at renewed confidence around Premier’s outlook.
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With Premier trading just above its latest analyst price targets and modest growth in revenue and profits, investors may wonder whether current momentum signals an undervalued buy or if the market has already priced in future gains.
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Most Popular Narrative: Fairly Valued
Premier’s most-followed narrative puts its fair value at $27.50, just under the last close of $28. The closeness between market and narrative suggests a delicate balance of expectations and risks.
Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years, which would further boost future earnings per share. To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.
Are you curious if shrinking the share count is really the secret sauce behind Premier’s current price estimate? The narrative’s valuation hinges on bold predictions for both profits and what investors are willing to pay in a few years. Wondering which future financial metrics make or break this case? Peek inside the full narrative to discover what’s driving the consensus fair value.
However, strong demand for Premier’s advisory and analytics solutions, or a shift in healthcare cost pressures, could quickly change the current narrative.
Another View: Our DCF Model Points to Undervaluation
Looking at Premier through the lens of our SWS DCF model, the picture shifts dramatically. While market multiples and analyst targets suggest shares are about fairly valued, our discounted cash flow approach indicates the stock is trading well below its estimated fair value. This model could be highlighting overlooked upside, or it may rely on assumptions the broader market is discounting.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Premier for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Build Your Own Premier Narrative
If you see things differently or would rather dig deeper on your own, you can shape your own narrative using our tools in just a few minutes, and Do it your way
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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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