Glenview Now Above 13% of Health Management Associates

The largest publicly traded U.S. hospital is HCA Holdings Inc (NYSE:HCA). HCA trades at a discount to Health Management according to Wall Street analysts, with a forward P/E of 9. It too had its sales come in higher last quarter than in the third quarter of 2011; though the growth rate was lower than Health Management’s at 11%, we’re not sure that is enough to justify expectations of continually lower growth. Of course, the combination of a low multiple and recent top-line growth suggests that HCA might be a good value in its own right, and it could be worth it to take a closer look at the company.

Other hospital stocks include Universal Health Services, Inc. (NYSE:UHS), Tenet Healthcare Corporation (NYSE:THC), Community Health Systems (NYSE:CYH), and LifePoint Hospitals, Inc. (NASDAQ:LPNT). Community Health Systems is an outlier at 8 times forward earnings estimates, which could be explained by the fact that the company saw a sharp hit to its earnings last quarter versus a year earlier and analyst estimates depend on improvement in 2013. The other three hospitals all carry a forward P/E of 11, but there has been a wide spread in terms of their recent financial performance. Looking at revenue growth in their most recent quarter compared to the same period in the previous year, Universal’s sales were up 3%; Tenet’s were up 6%; Lifepoint’s were up 14%. Since there are some differences among these companies- Universal, for example, operates behavioral health centers in addition to hospitals- they are not as directly comparable with Health Management as we would like. Still, they seem priced about even.