An Insider Bought Health Management Associates

We can also compare Health Management Associates to Universal Health Services, Inc. (NYSE:UHS), Tenet Healthcare Corporation (NYSE:THC), and LifePoint Hospitals, Inc. (NASDAQ:LPNT). These stocks generally carry P/E multiples in the 10-11 range, placing them at a discount to where Health Management Associates is trading at least in terms of historical performance. Universal Health Services and Lifepoint each reported a double-digit percentage decline in earnings in their most recent quarter compared to the same period in the previous year; Tenet has had an out-of-the-ordinary increase in net income but its stock price has also risen to place it at about the same forward multiple as its peers. We’d note that while Lifepoint is more or less a standard hospital company, Tenet also operates a number of diagnostic imaging centers while Universal Health Services includes a business segment focused on behavioral health. Unless either of those businesses is exceptionally attractive, we think that we’d recommend HCA as it is the market leader and it is priced at a discount in terms of forward earnings.

The insider buy at Health Management Associates is interesting, and the stock does look like it may be on the cheaper side, but the business hasn’t been doing too well recently. In addition, there are other companies in the same industry which are better values in terms of their trailing earnings and their stocks might make better picks.