Tenet Healthcare (THC): Valuation Insights as Insider Selling Raises New Questions for Investors

If you are watching Tenet Healthcare (THC) lately, you might have noticed a bit of turbulence. The company’s insiders, who already own a major chunk of shares, have made headlines by collectively selling sizable stakes over the past few months. There have not been any insider purchases to balance things out, which certainly gives market watchers pause and prompts fresh questions about what is next for Tenet’s outlook.

This wave of insider selling comes at an interesting time. The stock has delivered strong gains, up 27% over the past year and rising more than 21% in the past three months. Momentum appears solid even as annual revenue growth is running just under 4% and net income is holding steady. Aside from conference circuit appearances, the market mood is increasingly sensitive as longer-term returns have climbed, yet insider actions now add a layer of uncertainty for investors to consider.

So after such a run and with selling pressure from those closest to the company, is Tenet Healthcare at a rare discount or are markets already factoring in all the growth that is coming?

Most Popular Narrative: 1.5% Undervalued

The most widely followed analyst narrative suggests that Tenet Healthcare is currently moderately undervalued, with a fair value just above the company’s last closing price.

Ongoing expansion of Tenet's ambulatory surgical center (USPI) footprint and consistent M&A activity in high-margin, high-acuity outpatient procedures (e.g., total joint replacements, spine surgery) are capitalizing on the industry shift towards outpatient care. This supports both revenue growth and future net margin expansion due to favorable case mix and operational scale.

Curious what’s driving this price target and narrative? The crux lies in bold projections for earnings, revenue growth, and a future profit multiple that challenges today’s norms. Which numbers set this valuation apart? The widely tracked narrative unpacks the financial calculations behind the scenes to help explain what’s fueling analyst conviction.

Result: Fair Value of $199.48 (UNDERVALUED)

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

However, changes in government subsidies or slower hospital volume growth could quickly undermine much of the current optimism around Tenet’s valuation and earnings power.

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

Another View: Our DCF Model Paints a Different Picture

While analysts see Tenet Healthcare as close to fairly valued, our SWS DCF model suggests something very different. Tenet could be trading for far less than what its future cash flows might justify. Can fundamentals outpace the cautious narrative?

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 Tenet Healthcare 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 Tenet Healthcare Narrative

If you see things differently or want to dig deeper into the numbers, you can always craft your own perspective. Do it your way Do it your way.

A great starting point for your Tenet Healthcare research is our analysis highlighting 2 key rewards and 4 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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