HMA  Health Management Associates I...

Exchange

NYSE

Sector

Health Care

Industry

Hospital/Nursing Management

Market Cap.

3.520B

Vuru Grade

23.50/100

Current Price

$13.31
0.00 (0.00%)

Growth Price

$0.19
Overvalued by 98.58%

Stability Price

$2.00
Overvalued by 85.00%

Company Metrics

  • P/E 28.35
  • P/S 0.6
  • P/B 3.53
  • EPS 0
  • Cash ROIC 0.66%
  • Cash Ratio 0.28
  • Dividend 0 / 0%
  • Avg. Vol. 3.37M
  • Shares 11.93M
  • Market Cap. 3.520B

Company Description

Health Management Associates, Inc., through its subsidiaries, engages in the operation of general acute care hospitals and other health care facilities in non-urban communities in the United States. Its hospitals provide services, including general surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, and pediatric services. The company a... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

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Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for HMA to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate HMA's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$13.31 Current Price

$0.19 Growth Price (DCF)

Overvalued by 98.58%


Growth Rate Assumed by Market: 500.00%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


HMA's most recent year of (normalized) free cash flow is negative. This is the base number for forward projections. This means that if you increase the growth rate, the amount of negative FCF grows, thereby decreasing the price.

Show Free Cash Flow numbers

$2.00 Stability Price (EPV)

Overvalued by 85.00%


Discount Rate: 15.0%

$0.13 NCA Price

Overvalued by 99.01%

$6.44 Book Price

Overvalued by 51.60%


Poor Cash Return on Invested Capital over the past 5 years

HMA has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

HMA has only created $0.66 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20102011201220132014
Free Cash Flow 230.92M 247.97M 206.19M -645,000.00 -2.15M
divided by
Invested Capital 4.20B 5.01B 5.25B 28.27M 24.44M
Cash ROIC 5.50% 4.95% 3.93% -2.28% -8.80%

Inconsistent Return on Equity over the past 5 years

HMA has generated adequate returns with capital that shareholders have invested. However, there has been some inconsistency from year-to-year. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

HMA has generated $10.68 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20102011201220132014
Net Income 172.25M 203.93M 191.24M 214,000.00 -4.23M
divided by
Stockholders' Equity 520.90M 769.14M 1.00B 20.67M 16.09M
Return on Equity 33.07% 26.51% 19.05% 1.04% -26.27%

Good Business Performance over the past 10 years

It's likely HMA has been unable to maintain profitability in tough economic times, making it a somewhat cyclical business. The other possibility is HMA has expended significant capital on items such as property, plant and equipment in specific years. Look for correlations.

HMA has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Free Cash Flow 290.90M 111.52M 40.55M 177.31M 249.11M 230.92M 247.97M 206.19M -645,000.00 -2.15M

Weak Balance Sheet

HMA's financial position is not ideal. The key is to check whether HMA is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Cash 78.58M 66.81M 123.99M 143.61M 142.60M 159.14M 186.42M 180.28M 5.92M 4.82M
Current Assets 988.16M 1.01B 1.07B 1.05B 1.07B 1.19B 1.41B 1.47B 35.60M 31.99M
Total Assets 3.99B 4.49B 4.64B 4.56B 4.60B 4.91B 6.00B 6.40B 51.16M 46.50M
Current Liabilities 1.07B 472.02M 597.65M 490.27M 525.90M 555.63M 803.82M 972.42M 16.96M 17.25M
Total Liabilities 1.70B 2.08B 4.56B 4.40B 4.25B 4.39B 5.24B 5.40B 30.49M 30.42M
Stockholder' Equity 2.29B 2.41B 81.03M 154.30M 355.18M 520.90M 769.14M 1.00B 20.67M 16.09M
Current Ratio 0.92 2.14 1.78 2.14 2.04 2.15 1.75 1.51 2.10 1.86
TL-to-TA 0.43 0.46 0.98 0.97 0.92 0.89 0.87 0.84 0.60 0.65

Low or No Reinvestment of Profits over the past 10 years

HMA has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to HMA operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Retained Earnings 2.14B 2.33B 71.71M 238.93M 376.40M 526.47M 705.18M 869.45M -1.99M -6.54M
Retained Earnings Growth - 8.85% -96.92% 233.21% 57.54% 39.87% 33.94% 23.29% -100.23% -228.94%

Highly Competitive Industry over the past 10 years

It's likely that HMA is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely HMA invests heavily in R&D and Sales, General & Administrative expenses.

Only $2.41 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Net Income 353.08M 182.75M 119.88M 167.23M 163.94M 172.25M 203.93M 191.24M 214,000.00 -4.23M
divided by
Revenue 3.59B 4.06B 4.39B 4.45B 4.62B 5.11B 5.80B 5.88B 27.52M 37.73M
Net Profit Margin 9.84% 4.50% 2.73% 3.76% 3.55% 3.37% 3.51% 3.25% 0.78% -11.20%

Varying Pricing Power over the past 10 years

HMA has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$50.75 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Gross Profit 1.11B 1.88B 2.02B 2.02B 2.16B 2.38B 5.80B 2.35B 15.97M 17.85M
divided by
Revenue 3.59B 4.06B 4.39B 4.45B 4.62B 5.11B 5.80B 5.88B 27.52M 37.73M
Gross Margin 31.06% 46.35% 45.98% 45.35% 46.77% 46.59% 100.00% 40.01% 58.04% 47.31%

High Capital Intensity over the past 10 years

HMA spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

193.97% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Capital Expenditure 273.34M 338.54M 270.60M 218.18M 200.06M 209.44M 302.05M 388.90M 1.14M 875,000.00
divided by
Net Income 353.08M 182.75M 119.88M 167.23M 163.94M 172.25M 203.93M 191.24M 214,000.00 -4.23M
Capital Expenditure Ratio 77.42% 185.25% 225.73% 130.47% 122.03% 121.59% 148.12% 203.35% 531.78% -20.71%

Inconsistent Dividend History over the past 10 years

HMA has started distributing dividends in the past couple years or has recently suspended their dividend distribution. The reliability of future distributions is unclear.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Dividend Paid 38.63M 57.88M 2.43B 4.29M - 20.63M 28.28M 31.95M - -
divided by
Shares Outstanding 248.98M 243.34M 245.12M 244.67M 246.97M 251.11M 255.04M 256.71M 8.68M 11.93M
Dividend Paid Per Share 0.16 0.24 9.91 0.02 - 0.08 0.11 0.12 - -
Price at Year End 10.78 10.49 5.86 1.73 7.30 9.54 7.37 8.96 13.09 1.97
Dividend Yield 1.44% 2.27% 169.04% 1.01% - 0.86% 1.50% 1.39% - -

History of Stock Buybacks over the past 10 years

HMA has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2005200620072008200920102011201220132014
Shares Outstanding 248.98M 243.34M 245.12M 244.67M 246.97M 251.11M 255.04M 256.71M 8.68M 11.93M
Stock Bought Back - 2.32% -0.73% 0.18% -0.93% -1.65% -1.54% -0.65% 2,856.78% -27.25%
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