2 Reasons to Like ASTH and 1 to Stay Skeptical

Over the last six months, Astrana Health’s shares have sunk to $29.02, producing a disappointing 14.8% loss - a stark contrast to the S&P 500’s 22.9% gain. This may have investors wondering how to approach the situation.

Following the pullback, is this a buying opportunity for ASTH? Find out in our full research report, it’s free for active Edge members.

Why Does Astrana Health Spark Debate?

Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ:ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.

Two Positive Attributes:

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Astrana Health grew its sales at an exceptional 29.5% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers.

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Astrana Health’s EPS grew at an astounding 19.6% compounded annual growth rate over the last five years. This performance was better than most healthcare businesses.

One Reason to be Careful:

New Investments Fail to Bear Fruit as ROIC Declines

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Astrana Health’s ROIC has decreased significantly over the last few years. Only time will tell if its new bets can bear fruit and potentially reverse the trend.

Final Judgment

Astrana Health’s merits more than compensate for its flaws. With the recent decline, the stock trades at 5.5× forward EV-to-EBITDA (or $29.02 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

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