Are Tenet Healthcare Shares Now a Bargain After Recent Asset Sales and 53% Rally in 2025?

• Curious if Tenet Healthcare stock is really a bargain right now? You are definitely not alone, especially with so much talk about its true value.
• Although shares have dipped slightly over the last month, dropping 3.8%, the stock is still up an impressive 53.6% year-to-date and 25.4% for the past year.
• Recent headlines have helped fuel both the excitement and caution, including strategic asset sales and ongoing industry-wide conversations around healthcare spending. These developments offer important context to recent price swings and help explain the attention Tenet is getting from investors of all stripes.
• Additionally, Tenet Healthcare scores a perfect 6/6 on our valuation checks, suggesting it could be dramatically undervalued by several standard measures. Next, we will break down what is driving this impressive score across different valuation approaches, and reveal a smarter way to think about value by the time you reach the end.

Tenet Healthcare delivered 25.4% returns over the last year. See how this stacks up to the rest of the Healthcare industry.

Approach 1: Tenet Healthcare Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and discounting them back to today's dollars. This method helps investors understand what Tenet Healthcare could be worth based on its ability to generate cash in the years ahead.

For Tenet Healthcare, the latest reported Free Cash Flow (FCF) is $1.60 Billion. Analysts forecast the company's FCF will remain robust in the coming years, projecting $1.50 Billion by the end of 2026. Beyond the initial five-year analyst coverage, longer-term projections suggest FCF will hold relatively steady, ranging from $1.46 Billion in 2028 to about $1.69 Billion a decade out. These extended forecasts are extrapolated by Simply Wall St to provide additional perspective on Tenet's future earning potential.

After evaluating these projections, the DCF model estimates Tenet Healthcare's intrinsic value to be $380.01 per share. With the stock currently trading at a price that reflects a 49.4% discount to this value, the analysis signals the shares are significantly undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Tenet Healthcare is undervalued by 49.4%. Track this in your watchlist or portfolio, or discover 894 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Tenet Healthcare.

Approach 2: Tenet Healthcare Price vs Earnings

The Price-to-Earnings (PE) ratio is often the go-to metric for valuing profitable companies like Tenet Healthcare. This multiple tells investors how much they are paying for each dollar of earnings, making it a fast and intuitive way to gauge whether a stock seems cheap or expensive compared to its profits.

Growth expectations and risk both have a big impact on what is considered a “normal” or “fair” PE ratio. Companies expected to post above-average profit growth or with lower risks can generally justify higher PE ratios, while slower-growing or riskier firms tend to trade at lower ones.

Currently, Tenet Healthcare trades at a PE ratio of 12.5x, which is well below both the industry average of 21.8x and its peer group’s 19.9x. This notable discount can raise eyebrows, especially in light of the company's recent performance and future prospects.

To get a more tailored view, Simply Wall St uses something called the “Fair Ratio.” This metric blends in Tenet Healthcare’s growth outlook, profit margins, industry, company size, and risk factors, offering a more nuanced take than simply comparing to peers or industry averages. For Tenet Healthcare, the Fair Ratio works out to 23.3x, considerably higher than the current multiple.

With a PE multiple significantly below its Fair Ratio, Tenet Healthcare looks undervalued on this approach as well, reinforcing the attractive valuation highlighted by the DCF analysis.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Tenet Healthcare Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story about a company, connecting what you believe about Tenet Healthcare's future to concrete numbers like future revenue, profit margins, and fair value. Narratives help investors move beyond just the raw data and ratios, linking the company's big picture to a detailed forecast and resulting value estimate.

On Simply Wall St’s Community page, Narratives are easy to create and update. This lets you put your investment thesis into action, a tool used by millions of investors worldwide. Narratives guide your decisions by showing how your expected Fair Value compares to the current share price. This makes it clear when to consider buying or selling. As new information such as earnings reports or market news is released, Narratives automatically update your forecasts and fair value results. This keeps your view relevant and dynamic.

For example, while some investors’ Narratives for Tenet Healthcare project its fair value as high as $420 based on rapid growth expectations, others see it closer to $240 due to more conservative forecasts and industry risks.

Do you think there's more to the story for Tenet Healthcare? Head over to our Community to see what others are saying!

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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