Q3 Earnings Preview for Tenet Healthcare (NYSE:THC)

in EARNINGS/INVESTING IDEAS by

Tenet Healthcare Corporation (NYSE:THC) is scheduled to report Q3 earnings results after markets close for trading on October 20, 2020.

The company is expected to report earnings of $0.24/share on revenue of $4.393 billion. The consensus earnings per share (EPS) of $0.24/share is based on a poll of 15 analysts and represents a decline in eps of −58.1% over the same quarter last year, when the company reported earnings of $0.58/share.

The revenue forecast of $4.393 billion based on a poll of 14 analysts implies a year-over-year (YoY) decline in revenue of −3.8%. Last year the company reported $4.568 billion in revenue for the quarter.

Expected to report EPS contraction of −58.1% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $4,393.44 $4,568.00 −3.8%
EPS $0.24 $0.58 −58.1%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Tenet Healthcare Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.71 $1.26 276.3% Beat
Q1, 2020 $0.29 $1.28 340.8% Beat
Q4, 2019 $0.98 $0.99 0.5% Beat
Q3, 2019 $0.32 $0.58 82.5% Beat
Q2, 2019 $0.44 $0.56 26.2% Beat
Q1, 2019 $0.29 $0.54 84.6% Beat
Q4, 2018 $0.29 $0.51 74.6% Beat
Q3, 2018 $0.12 $0.29 144.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $26.44 $26.59 0.6% Increase
May 4, 2020 $17.49 $18.90 8.1% Increase
February 24, 2020 $34.20 $29.25 −14.5% Decline
November 4, 2019 $25.88 $28.11 8.6% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.21, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.21 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Tenet Healthcare Corporation is currently trading at $28.86/share, down −0.4% for the day. The company is trading at approximately 73.5% of its 52-week high of $39.37/share. The company’s stock price is up 8.5% since the last earnings report and up 3.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 54.13 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:THC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −46.58 and a forward P/E multiple of 7.74.

Tenet Healthcare Corporation’s current share price also implies a price-to-book (P/B) multiple of −11.78. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $28.86
P/E Ratio −46.6x
P/E Ratio (Fwd) 7.7x
Price To Sales 0.2x
Total Debt / Total Capital 74.1%
Levered Free Cash Flow $2.685 billion
EV / EBITDA 6.6x

Finbox

Tenet Healthcare Corporation is a mid-cap stock with a market capitalization of $3.052 billion and a total enterprise value of $17.877 billion. The company operates in the Healthcare sector and the Healthcare Providers & Services industry.

Tenet Healthcare Corporation operates as a diversified healthcare services company. The company operates through three segments: Hospital Operations and Other, Ambulatory Care, and Conifer. Its general hospitals offer acute care services, operating and recovery rooms, radiology and respiratory therapy services, clinical laboratories, and pharmacies. The company also provides intensive and critical care, and coronary care units; cardiovascular, digestive disease, neurosciences, musculoskeletal, and obstetrics services; outpatient services, including physical therapy; cardiothoracic surgery, complex spinal surgery, neonatal intensive care, and neurosurgery services; quaternary care services in heart and kidney transplants; and limb-salvaging vascular procedures, acute level 1 trauma services, intravascular stroke care, minimally invasive cardiac valve replacement, imaging technology, and telemedicine access for various medical specialties. In addition, it operates ambulatory surgery and urgent care centers, imaging centers, surgical, off-campus emergency, and micro-hospitals; and offers healthcare business process services in the areas of hospital and physician revenue cycle management, as well as value-based care solutions to healthcare systems, individual hospitals, physician practices, self-insured organizations, health plans, and other entities. As of December 31, 2019, the company operated 65 hospitals, 24 surgical hospitals, and approximately 159 outpatient centers, as well as 260 ambulatory surgery, 39 urgent care, and 23 imaging centers in the United States. Tenet Healthcare Corporation was incorporated in 1975 and is headquartered in Dallas, Texas.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.