SunLink Health Systems Stock Gives Every Indication Of Being Significantly Overvalued

The inventory of SunLink Overall health Systems (AMEX:SSY, 30-12 months Financials) is believed to be substantially overvalued, in accordance to GuruFocus Benefit calculation. GuruFocus Value is GuruFocus’ estimate of the honest worth at which the inventory should really be traded. It is calculated dependent on the historic multiples that the stock has traded at, the past business progress and analyst estimates of upcoming business performance. If the price tag of a inventory is substantially above the GF Benefit Line, it is overvalued and its potential return is probable to be weak. On the other hand, if it is drastically down below the GF Value Line, its long term return will possible be higher. At its recent selling price of $2.25 for every share and the marketplace cap of $15.5 million, SunLink Well being Units stock offers each and every indicator of staying noticeably overvalued. GF Worth for SunLink Wellbeing Systems is proven in the chart under.

SunLink Health Systems GF Value Chart

For the reason that SunLink Health Systems is substantially overvalued, the very long-term return of its inventory is very likely to be much reduce than its long term business development, which averaged 6.4{2e54b6599e2852fcddcb96c51aef71201c0435684ebd8fbda55b4c693aab2644} around the past five yrs.

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Investing in firms with poor financial strength has a increased chance of lasting decline of capital. As a result, it is critical to meticulously overview the financial strength of a corporation ahead of choosing regardless of whether to get its stock. On the lookout at the income-to-debt ratio and desire protection is a good beginning place for being familiar with the economical power of a enterprise. SunLink Wellbeing Techniques has a dollars-to-credit card debt ratio of 2.35, which is superior than 67{2e54b6599e2852fcddcb96c51aef71201c0435684ebd8fbda55b4c693aab2644} of the firms in the marketplace of Healthcare Suppliers & Products and services. GuruFocus ranks the over-all fiscal toughness of SunLink Wellness Devices at 6 out of 10, which implies that the monetary energy of SunLink Health Methods is good. This is the financial debt and cash of SunLink Health Systems more than the previous yrs:

debt and cash

Investing in successful organizations carries considerably less possibility, especially in businesses that have demonstrated regular profitability about the very long expression. Normally, a company with higher income margins offers greater effectiveness potential than a corporation with lower profit margins. SunLink Overall health Devices has been profitable 4 several years in excess of the previous 10 yrs. Through the earlier 12 months, the enterprise experienced revenues of $43.9 million and earnings of $.29 a share. Its working margin of -2.20{2e54b6599e2852fcddcb96c51aef71201c0435684ebd8fbda55b4c693aab2644} worse than 68{2e54b6599e2852fcddcb96c51aef71201c0435684ebd8fbda55b4c693aab2644} of the businesses in the sector of Healthcare Companies & Products and services. Over-all, GuruFocus ranks SunLink Overall health Systems’s profitability as inadequate. This is the revenue and web money of SunLink Well being Programs above the earlier many years:

Revnue and Net Income

Growth is most likely the most critical component in the valuation of a enterprise. GuruFocus research has located that advancement is closely correlated with the extensive phrase performance of a firm’s inventory. The quicker a company is escalating, the a lot more very likely it is to be producing value for shareholders, especially if the expansion is lucrative. The 3-calendar year ordinary yearly profits advancement amount of SunLink Health and fitness Programs is 6.4{2e54b6599e2852fcddcb96c51aef71201c0435684ebd8fbda55b4c693aab2644}, which ranks in the center selection of the providers in the sector of Healthcare Vendors & Companies. The 3-year typical EBITDA development rate is 120.3{2e54b6599e2852fcddcb96c51aef71201c0435684ebd8fbda55b4c693aab2644}, which ranks much better than 99{2e54b6599e2852fcddcb96c51aef71201c0435684ebd8fbda55b4c693aab2644} of the businesses in the marketplace of Healthcare Vendors & Services.

A further process of figuring out the profitability of a business is to look at its return on invested capital to the weighted common price tag of money. Return on invested money (ROIC) measures how very well a business generates money move relative to the funds it has invested in its business. The weighted common expense of cash (WACC) is the charge that a company is envisioned to pay back on average to all its stability holders to finance its belongings. When the ROIC is bigger than the WACC, it implies the corporation is producing worth for shareholders. For the past 12 months, SunLink Wellbeing Systems’s return on invested funds is -6.39, and its charge of capital is 7.19. The historic ROIC vs WACC comparison of SunLink Health and fitness Methods is revealed below:


In summary, the inventory of SunLink Wellbeing Units (AMEX:SSY, 30-yr Financials) shows each sign of remaining drastically overvalued. The firm’s fiscal problem is fair and its profitability is very poor. Its progress ranks better than 99{2e54b6599e2852fcddcb96c51aef71201c0435684ebd8fbda55b4c693aab2644} of the providers in the market of Healthcare Suppliers & Providers. To learn additional about SunLink Health and fitness Methods stock, you can examine out its 30-calendar year Financials right here.

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