Universal Health Services

Methodology

Universal Health Services' fair value calculation is complicated by the company's dual focus on acute care hospitals and behavioral health facilities, which operate under different reimbursement models and growth dynamics. The method works reasonably well when applied to normalized earnings, though investors should adjust for regulatory changes, reimbursement rate fluctuations, and one-time legal or compliance costs. Fair value estimates are most reliable when considering UHS's mix of higher-growth behavioral health and more stable acute care operations.

Methodology

UHS typically trades at moderate PEG ratios reflecting steady demand for behavioral health services offset by regulatory scrutiny and reimbursement pressures in the acute care segment. The PEG framework works for comparing UHS to other healthcare facility operators, though investors should normalize for acquisition impacts and same-facility volume trends. As behavioral health grows as a percentage of the mix, the PEG may reflect improving growth visibility and reduced acute care cyclicality.

Methodology

UHS pays no regular dividend, as management prioritizes reinvesting cash flow in facility upgrades, capacity expansion, and occasional acquisitions to grow the behavioral health network. PEGY therefore equals PEG with no yield component, reflecting the company's growth-focused capital allocation. For UHS investors, evaluating behavioral health census trends, reimbursement stability, and regulatory compliance matters more than dividend income.