PACS Group (PACS): Valuation Check After Analyst Upgrades, Refinancing Boost and New Las Vegas Facility Deal

Fresh analyst support, a refinancing break, and a Las Vegas facility deal have put PACS Group (PACS) back in focus, as new compliance and HR leaders step in to guide the next expansion phase.

See our latest analysis for PACS Group.

The steady stream of positive developments seems to be feeding into sentiment, with PACS Group’s 30 day share price return of around 121% and its roughly 168% year to date share price gain suggesting strong momentum from growth expectations and reduced perceived risk.

Given that backdrop, this could be a handy moment to see what else is moving in healthcare and compare PACS with healthcare stocks.

With the stock up sharply and trading only modestly below near term price targets, the key question now is whether PACS is still trading at a discount or if the market has already priced in its next leg of growth.

Price-to-Earnings of 32.1x: Is it justified?

On a headline basis, PACS Group looks expensive at a 32.1x price to earnings multiple versus peers, especially after such a rapid share price move.

The price to earnings ratio compares the current share price to per share earnings and is a common way to judge how much investors are paying for each dollar of profit in healthcare operators.

In PACS Group’s case, the premium multiple suggests the market is assigning a higher value to its earnings stream, reflecting rapid recent profit growth and expectations that strong earnings expansion will continue.

That optimism stands out when stacked against the broader sector. PACS trades well above both its peer average of 22.3x and the wider US healthcare industry average of 23.6x. Its current multiple still sits below an estimated fair price to earnings level of 45.5x that the market could potentially gravitate toward if forecasts are delivered.

Explore the SWS fair ratio for PACS Group

Result: Price-to-Earnings of 32.1x (OVERVALUED)

However, sustained outperformance still hinges on flawless execution in acquisitions and facility operations, with any earnings stumble or regulatory setback potentially putting pressure on the premium valuation.

Find out about the key risks to this PACS Group narrative.

Another Lens on Value

Our DCF model paints a far harsher picture than the earnings multiple, with PACS trading well above an estimated fair value of just $4.45 per share, implying it is sharply overvalued on cash flow assumptions. If the market starts to care more about cash than momentum, how much downside risk is really on the table?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out PACS Group 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 909 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 PACS Group Narrative

If you prefer your own view of the numbers, you can quickly build a personalized PACS story in just a few minutes, starting with Do it your way.

A great starting point for your PACS Group research is our analysis highlighting 2 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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