At the current price of $13, what are market expectations regarding R1 RCM INC’s future operating performance? To achieve average annual stock market performance of 9.0% over the next 6 years, R1 RCM INC shares will need to reach $22. Upper quartile performance will require a $26 R1 RCM INC stock price by 2029.
Executive Summary
- Key R1 RCM INC characteristics: high expected growth, high financial strength, high profitability, and instability. A big positive influence on R1 RCM INC’s valuation is its superior Growth.
- Low valuation, average shareholder returns. Current valuation levels are below average relative to the R1 RCM INC Peer Group. Recent market returns have tracked the R1 RCM INC Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, R1 RCM INC shares should reach a level of $28 by 2029 — an 13.8% per year total shareholder return. A 2029 stock price of $22 would reflect median performance and a price of $26 would be required to reach upper quartile performance.
- Growth has been R1 RCM INC’s biggest valuation strength. Historical growth has been very high relative to the R1 RCM INC Peer Group and forecasted growth is relatively very high. Asset Growth, and Equity Growth have been superior. Revenue Growth, and EPS Growth have lagged. R1 RCM INC’s historical income statement growth has been lower than balance sheet growth. Revenue growth has fallen short of asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity. R1 RCM INC’s consensus growth expectations are lower than historical growth.
- Asset Turnover is group lagging. This factor has negatively affected market perceptions of R1 RCM INC. The company has high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
- R1 RCM INC’s risk profile is favorable. Overall variability has been very high with very high revenue variability, very high E.P.S. variability, and relatively low stock price volatility. Financial Strength is relatively high and earnings’ expectations are relatively very high. The debt/capital ratio has declined.
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