Pennant Group (PNTG) AI Stock Analysis

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Pennant Group

(NASDAQ:PNTG)

69Neutral

Pennant Group's strong revenue growth and improved profitability are the most significant factors supporting its stock score. The technical analysis suggests moderate momentum but warns of overbought conditions. Valuation metrics hint at potential overvaluation, which is offset by robust earnings call data showcasing growth and operational success. Overall, the stock shows a positive outlook with some caution due to valuation and cash flow challenges.

Pennant Group (PNTG) vs. S&P 500 (SPY)

Market Cap

$1.03B

Dividend YieldN/A

Average Volume (3M)210.78K

Price to Earnings (P/E)38.8

Beta (1Y)0.68

Revenue Growth30.04%

EPS Growth43.47%

CountryUS

Employees7,000

SectorHealthcare

Sector Strength41

IndustryMedical - Care Facilities

Share Statistics

EPS (TTM)0.27

Shares Outstanding34,468,983

10 Day Avg. Volume237,008

30 Day Avg. Volume210,781

Financial Highlights & Ratios

PEG Ratio13.08

Price to Book (P/B)2.88

Price to Sales (P/S)0.00

P/FCF Ratio44.77

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$31.67

Price Target Upside6.49% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Pennant Group Business Overview & Revenue Model

Company DescriptionThe Pennant Group, Inc. is a leading provider of healthcare services, primarily focusing on home health, hospice, and senior living services. The company operates a network of agencies and facilities across the United States, providing comprehensive care for elderly individuals and those recovering from illness or injury. Pennant Group is committed to delivering high-quality, personalized services that meet the needs of its patients and residents.

How the Company Makes MoneyThe Pennant Group makes money through its three main service lines: home health, hospice, and senior living. Revenue in the home health and hospice sectors is generated primarily through reimbursements from Medicare, Medicaid, and private insurance for services rendered. The senior living segment earns revenue from private payers, which include residents and their families, who pay for room, board, and care services. The company's growth strategy often involves acquiring and integrating new agencies and facilities, which can expand its market reach and revenue base. Additionally, Pennant Group's focus on operational efficiency and quality care helps maintain its competitive edge and profitability.

Pennant Group Financial Statement Overview

Summary

Pennant Group demonstrates solid revenue growth and improved profitability, supported by efficient cash flow management and reduced financial leverage. However, the high liabilities and the peculiar gross profit reporting require careful monitoring. The overall financial health of the company appears stable with a positive growth trajectory.

Income Statement

Positive

The company shows a strong revenue growth rate of approximately 27.6% from 2023 to 2024, indicating robust business expansion. However, the gross profit margin remains flat at 100% due to the reported gross profit equaling total revenue, which may suggest a reporting issue. EBIT and EBITDA margins have improved to 5.5% and 4.1% respectively, reflecting better operational efficiency. The net profit margin increased from 2.5% to 3.2%, demonstrating enhanced profitability.

Balance Sheet

Neutral

Pennant Group's debt-to-equity ratio decreased to 0.93 from 2.35, indicating improved financial leverage. The return on equity (ROE) increased to 7.7%, reflecting better profitability relative to shareholder equity. However, the equity ratio stands at 43.2%, indicating moderate reliance on equity financing. Overall, the balance sheet shows a positive trend in managing debts but still retains a relatively high level of liabilities.

Cash Flow

Positive

The operating cash flow to net income ratio increased to 1.7x, suggesting strong cash generation capability relative to net income. Free cash flow improved significantly, with a growth of approximately 21.3%, showcasing enhanced cash management and operational efficiency. The free cash flow to net income ratio stands at 1.34x, indicating good cash flow coverage. The company exhibits a strong cash flow position with improved liquidity.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
695.24M	544.89M	473.24M	439.69M	390.95M
	Gross Profit
93.76M	67.04M	58.59M	45.74M	54.89M
	EBIT
38.12M	25.17M	19.67M	4.70M	18.92M
	EBITDA
44.44M	30.64M	24.60M	9.46M	23.82M
	Net Income Common Stockholders
22.56M	13.38M	6.64M	2.15M	15.74M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
24.25M	6.06M	2.08M	5.19M	43.00K
	Total Assets
679.52M	539.69M	512.12M	530.30M	506.98M
	Total Debt
273.09M	329.63M	326.57M	355.24M	319.00M
	Net Debt
248.84M	323.57M	324.49M	350.05M	318.95M
	Total Liabilities
367.56M	394.18M	386.46M	416.05M	405.80M
	Stockholders Equity
293.28M	140.34M	121.01M	110.20M	96.58M
Cash Flow		Free Cash Flow
30.31M	24.98M	-5.13M	-24.53M	42.95M
	Operating Cash Flow
39.30M	33.09M	9.04M	-18.22M	50.20M
	Investing Cash Flow
-70.68M	-30.22M	-24.24M	-20.12M	-41.62M
	Financing Cash Flow
49.57M	1.11M	12.08M	43.49M	-8.95M

Pennant Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price29.74

Price Trends

50DMA

25.55

Positive

100DMA

25.93

Positive

200DMA

29.15

Positive

Market Momentum

MACD

1.19

Negative

RSI

77.25

Negative

STOCH

92.10

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PNTG, the sentiment is Positive. The current price of 29.74 is above the 20-day moving average (MA) of 27.05, above the 50-day MA of 25.55, and above the 200-day MA of 29.15, indicating a bullish trend. The MACD of 1.19 indicates Negative momentum. The RSI at 77.25 is Negative, neither overbought nor oversold. The STOCH value of 92.10 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PNTG.

Pennant Group Risk Analysis

Pennant Group disclosed 41 risk factors in its most recent earnings report. Pennant Group reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Pennant Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (52)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HCSG	73 Outperform	$1.07B	26.21	8.37%	―	3.71%	1.32%
PNTG	69 Neutral	$1.03B	38.80	11.28%	―	30.04%	43.47%
USPH	64 Neutral	$1.21B	36.74	6.72%	2.22%	14.30%	76.89%
BKD	56 Neutral	$1.61B	―	-91.17%	―	3.88%	-34.30%
SNDA	56 Neutral	$493.52M	―	-70.23%	―	26.13%	37.38%
Sector *	52 Neutral	$5.19B	3.04	-44.64%	2.82%	16.45%	-0.53%
AVAH	51 Neutral	$1.11B	327.59	42.49%	―	9.05%	―

* Healthcare Sector Average

Performance Comparison

PNTG

Pennant Group

29.74

6.06

25.59%

BKD

Brookdale Senior Living

6.75

-0.14

-2.03%

SNDA

Sonida Senior Living

26.16

-5.65

-17.76%

HCSG

Healthcare Services

14.67

3.26

28.57%

USPH

US Physical Therapy

79.71

-24.05

-23.18%

AVAH

Aveanna Healthcare Holdings

5.70

2.78

95.21%

Pennant Group Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: 10.80%|

Next Earnings Date:Aug 11, 2025

Earnings Call Sentiment Positive

The earnings call indicates strong financial performance and growth across segments, particularly in home health, hospice, and senior living, supported by successful acquisition integrations and leadership development. However, challenges remain with cash flow and labor cost inflation.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

Revenue of $209.8 million, an increase of $52.9 million or 33.7% over the prior year quarter; consolidated adjusted EBITDA of $16.4 million, an increase of $5.1 million or 45.9% over the prior year quarter; adjusted diluted earnings per share of $0.27, an increase of $0.07 or 35% over the prior year quarter.

Home Health and Hospice Segment Performance

Segment revenue reached $159.9 million, up $43.4 million or 37.2%, and adjusted EBITDA rose to $25.1 million, an increase of $7.3 million or 40.6% over the prior year quarter.

Strong Senior Living Business Performance

Senior Living segment revenue of $50 million increased by $9.5 million or 23.6% over the prior year quarter; adjusted EBITDA of $4.9 million increased by $1.4 million or 40.8%.

Positive Acquisition and Transition Outcomes

Completed the Signature Healthcare transaction, adding several locations across Oregon and successfully integrating operations ahead of schedule.

Leadership Development Success

Since January of last year, 52 local leaders earned C-level designations, including 19 local CEOs.

Negative Updates

Cash Flow Challenges

Cash flows used in operations were $21.2 million, a decrease of operating cash flow of $21.8 million compared to the prior year quarter due to significant acquisitions and accrual timing.

Elevated Labor Cost Inflation

On the senior living side, labor cost inflation was just under 5%, while home health and hospice saw a more normalized rate of 3.2%.

Company Guidance

During The Pennant Group's first quarter 2025 earnings call, the company reported record-breaking results with revenues reaching $209.8 million, representing a 33.7% increase from the previous year. Consolidated adjusted EBITDA was $16.4 million, a 45.9% rise, and adjusted diluted earnings per share were $0.27, up by 35%. The Home Health and Hospice segment achieved $159.9 million in revenue, a 37.2% increase, and an adjusted EBITDA of $25.1 million, marking a 40.6% rise. Hospice admissions grew by 22.8%, and the average daily census increased by 28.1%. Meanwhile, the Senior Living segment saw a revenue of $50 million, a 23.6% increase, with an adjusted EBITDA of $4.9 million, up by 40.8%. The company also reported strong operational cash flow expectations for 2025, ranging between $35 million and $45 million. The guidance for the year anticipates revenues of $800 million to $865 million, adjusted EBITDA between $63.1 million and $68.2 million, and adjusted EPS from $1.03 to $1.11.

Pennant Group Corporate Events

Business Operations and StrategyFinancial Disclosures

Pennant Group Reports Strong Q1 2025 Financial Results

Positive

May 6, 2025

On May 6, 2025, The Pennant Group, Inc. announced its first quarter 2025 financial results, reporting a significant increase in earnings and revenue compared to the previous year. The company achieved a GAAP diluted earnings per share of $0.22 and an adjusted diluted earnings per share of $0.27. Total revenue for the quarter reached $209.8 million, marking a 33.7% increase, while net income rose by 58.5% to $7.8 million. The home health and hospice services segment saw a 37.2% revenue increase, and the senior living services segment experienced a 23.6% revenue growth. The company attributes its strong performance to ongoing investments in leadership development and strategic acquisitions, which have driven record operational results.

Spark’s Take on PNTG Stock

According to Spark, TipRanks’ AI Analyst, PNTG is a Neutral.

The Pennant Group displays strong financial performance and positive earnings guidance, which are key strengths. Technical indicators suggest moderate momentum, while a high P/E ratio points to potential overvaluation. The absence of a dividend yield may deter some investors. Overall, the company is on a positive trajectory, though careful monitoring of liabilities and valuation is advised.

To see Spark’s full report on PNTG stock, click here.

Financial Disclosures

Pennant Group Reports Strong 2024 Financial Results

Positive

Feb 27, 2025

The Pennant Group reported its financial results for the fiscal year and fourth quarter of 2024, highlighting a significant increase in revenue and net income compared to the previous year. The company achieved a total revenue of $695.2 million for the year, marking a 27.6% increase, and a net income of $22.6 million, a 68.6% rise over the prior year. The Home Health and Hospice Services segment saw substantial growth, with a 31.7% increase in revenue for the year. The company also provided guidance for 2025, anticipating continued growth with expected total revenue between $800 million and $865 million.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.