HCA Healthcare Faces Legal Scrutiny: Assessing Valuation After 401(k) Lawsuit Ruling

If you’re weighing your next move with HCA Healthcare (HCA), the latest legal twist probably caught your eye. A Tennessee federal judge just rejected HCA Healthcare’s effort to pause the evidence-gathering phase in a lawsuit over alleged misuse of forfeited employee 401(k) funds. While this might sound like just another lawsuit, it directly puts the company’s employee benefits practices in the spotlight and introduces near-term risks that investors cannot ignore. Zooming out, this legal wrinkle comes during a year where HCA Healthcare’s stock has been building momentum. The stock has risen more than 10% over the past month and over 15% in the past 3 months. The company’s annual gains are also strong, but this legal case is the headline moving markets now. Outside the courtroom, HCA is piloting artificial intelligence-driven safety technology and expanding educational partnerships with nursing programs. These efforts showcase ongoing operational improvements and a focus on long-term growth. After a year of strong returns and active company initiatives, is the market discounting the real impact of this legal risk, or could this dip be a chance for patient investors to get in before the next phase of growth?

Most Popular Narrative: 5.6% Overvalued

According to the most widely followed narrative, HCA Healthcare is currently priced about 5.6% higher than its estimated fair value. This assessment hinges on expectations for moderate earnings growth and some pressure on margins despite ongoing operational improvements.

Analysts are assuming HCA Healthcare's revenue will grow by 5.5% annually over the next 3 years. Analysts expect earnings to reach $6.9 billion (and earnings per share of $33.36) by about September 2028, up from $6.0 billion today. The analysts are largely in agreement about this estimate.

Think HCA’s current price tag is all about the surface numbers? There is a deeper narrative at play, built on measured forecasts and a shrinking future profit multiple. Curious which financial assumptions drive this value call and what could rewrite the story? Stick around for a breakdown of the calculations that keep Wall Street talking.

Result: Fair Value of $398.57 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing regulatory shifts and rising professional fees could quickly challenge the optimistic outlook that currently supports HCA’s valuation.

Find out about the key risks to this HCA Healthcare narrative.

Another View

Looking at HCA Healthcare through our DCF model, the picture shifts. This approach points to the shares actually being undervalued, which challenges the overvaluation suggested by market-based estimates. Which valuation story feels more convincing?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding HCA Healthcare to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own HCA Healthcare Narrative

If you think there’s another angle, or want to see what your own analysis uncovers, you can build your own perspective in just a few minutes. Do it your way.

A great starting point for your HCA Healthcare research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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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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