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Calculating Healthcare Services Group's Fair Value with 2 Stage Free Cash Flow to Equity
ByAinvest
Thursday, Aug 14, 2025 2:08 pm ET1min read
Healthcare Services Group's projected fair value is estimated at $16.45 based on a 2-stage free cash flow to equity model. The current share price of $15.27 is close to the estimated fair value. Analysts' price target for HCSG is $17.00, which is 3.4% above the estimated fair value.
Healthcare Services Group (HCSG) has seen its share price fluctuate, with the current trading price of $15.27 closely aligned with its estimated fair value of $16.45. This valuation is derived from a 2-stage free cash flow to equity model, indicating that the company is trading near its intrinsic worth [1].The company's Price-To-Earnings (P/E) ratio stands at 102.3x, significantly higher than the industry average of 30.7x and the peer average of 36x. This high P/E ratio suggests that HCSG is expensive compared to its peers and the broader industry, potentially indicating that the market has high expectations for the company's future growth [1].
Analysts have provided a consensus price target of $17.00 for HCSG, which is 3.4% above the estimated fair value of $16.45. This target price is less than 20% higher than the current share price, indicating a cautious yet optimistic outlook from the analyst community [1].
Key Valuation Metrics:
- Enterprise Value/Revenue: 0.5x
- Enterprise Value/EBITDA: 63x
- PEG Ratio: 1.5x
These metrics provide additional insights into HCSG's valuation. The company's Enterprise Value/Revenue ratio of 0.5x suggests that its valuation is relatively low compared to its revenue, while the Enterprise Value/EBITDA ratio of 63x indicates a higher valuation relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA) [1].
The PEG ratio of 1.5x, which is the Price/Earnings ratio divided by the earnings growth rate, suggests that the company's valuation is reasonable given its expected earnings growth rate [1].
In conclusion, Healthcare Services Group is trading near its estimated fair value, with a high P/E ratio indicating that the market has high expectations for the company's future growth. Analysts' price target of $17.00 suggests a cautious yet optimistic outlook, with the current share price closely aligned with the estimated fair value.
References
[1] https://simplywall.st/stocks/us/commercial-services/nasdaq-hcsg/healthcare-services-group/valuation
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