National HealthCare Corp. – Value Analysis (NYSE AMERICAN:NHC) : November 3, 2017

Capitalcube gives National HealthCare Corp. a score of 69.

Our analysis is based on comparing National HealthCare Corp. with the following peers – Capital Senior Living Corporation, Genesis Healthcare Inc Class A, Ensign Group, Inc., Five Star Senior Living Inc, Kindred Healthcare, Inc., Diversicare Healthcare Services, Inc. and Regional Health Properties, Inc. (CSU-US, GEN-US, ENSG-US, FVE-US, KND-US, DVCR-US and RHE-US).

Investment Outlook

National HealthCare Corp. has a fundamental score of 69 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It’s current Price/Book of 1.44 is about median in its peer group.
  • NHC-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • NHC-US has relatively high profit margins while operating with median asset turns.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • NHC-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s median gross margin and relatively high pre-tax margins suggest non-differentiated product portfolio but with tight cost control relative to peers.
  • While NHC-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.
  • NHC-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

NHC-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 15.15% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 67.14%), and a well-cushioned interest coverage level of 14.01x, NHC-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 7 peers for the company have an outstanding debt balance.

NHC-US has maintained its Quick & Able profile from the recent year-end.

  • NHC-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 218.77x in 2013.
  • Though its interest coverage decreased to 14.01x from 16.36x (in 2016), its peer median remained relatively stable during this period at 0.83x.
  • Interest coverage fell 2.508 points relative to peers. It is also above the 2.50x coverage benchmark unlike the peer median.
  • NHC-US‘s debt-EV is over one standard deviation above its five-year average debt-EV of 7.91%.
  • The increase in its debt-EV to 15.15% from 13.54% (in 2016) was also accompanied by an increase in its peer median during this period to 67.14% from 53.99%.
  • Relative to peers, debt-EV fell 11.55 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

Access the detailed analysis for National HealthCare Corp.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Capital Senior Living Corporation 68.38 0.64 0.29 5.06
Genesis Healthcare Inc Class A 105.5 1.26 0.45 3.49
Ensign Group, Inc. 21.55 1.58 7.39 38.62
Five Star Senior Living Inc 72.08 0.61 -6.26 20.19
Kindred Healthcare, Inc. 76.71 1.51 1.31 -2.14
Diversicare Healthcare Services, Inc. 65.91 1.4 1.21 20.44
Regional Health Properties, Inc. 48.73 N/A 0.07 0.93
National HealthCare Corporation 15.15 2.4 14.01 66.32
Peer Median 67.14 1.4 0.83 12.62
Best In Class 15.15 2.4 14.01 66.32

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Company Profile

National HealthCare Corp. engages in the operation of health care centers. It provides sub and post-acute nursing care, intermediate nursing care, rehabilitative care, senior living services and home health care services. The company also offers management services, accounting and financial services and insurance services to third party owners of health care facilities. National HealthCare was founded by Carl E. Adams in 1971 and is headquartered in Murfreesboro, TN.


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