Value
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.9 |
| P/S | 10.0 |
| EV/EBITDA | 5.0 |
| Fwd P/E | 9.0 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 12.1x
- ▸PEG: 0.43
- ▸Attractively valued
SEM · Why this verdict
Why Select Medical Holdings Corpora (SEM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Select Medical trades at an attractive forward price-to-earnings of 12.1x with a PEG of 0.43 and is in a golden cross breakout pattern, but the stock already trades above its analyst target with negative asymmetry of -1.7%, analyst earnings estimates have declined -29.7% over 30 days, and business quality is below the minimum threshold at 3.0 out of 10.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Business quality is at the minimum threshold of 3.0 out of 10 with free cash flow at only 30% of net income, near-zero gross margins in a healthcare services context, and no identified competitive moat, indicating the business generates minimal economic surplus above its operating costs. Quality breakdown | Quality score improves above 4.0 and free cash flow as a percentage of net income rises above 50% within 12 months. | →Stable |
| CounterSpecialty hospital and rehabilitation facility operators typically require significant ongoing capital investment that suppresses free cash flow ratios; the absolute quality score may overstate the structural weakness relative to sector-specific benchmarks. | ||
The stock trades at a forward price-to-earnings of 12.1x with a PEG of 0.43, placing it at an attractive value for a healthcare company and suggesting it may be near the trough of a negative earnings revision cycle. Valuation breakdown | Price rises above $20, more than 20% above the current $16.65, within 12 months if the earnings revision cycle reverses and estimates stabilize. | →Stable |
| CounterA PEG of 0.43 when earnings estimates have declined -29.7% in 30 days indicates the denominator — growth — may be inflated by forward estimates that themselves are at risk of further reduction; the cheap multiple may not be stable. | ||
Earnings estimates have declined -29.7% over the past 30 days — the most severe near-term downward revision in the current analysis batch — indicating that analysts are materially reducing their expectations for the company's near-term profitability. Catalyst breakdown | The rate of downward earnings revisions slows to less than -5% over the next 30-day period, signaling the revision cycle is stabilizing. | →Stable |
| CounterSharp downward estimate revisions often overshoot in both speed and magnitude; if the actual business trajectory is better than the revised estimates, the stock could recover faster than the consensus currently implies. | ||
The stock trades at $16.65 above the analyst technical target of $16.37 with negative asymmetry of -1.7%, meaning that at current prices the stock has already exceeded what the technical framework considers fair value, creating an unfavorable entry situation despite the breakout pattern. Targets | Analyst consensus price target rises above $20, more than 20% above the current $16.65, reflecting upward revisions after a stabilization of the earnings estimate cycle. | →Stable |
| CounterTechnical price targets in a golden cross breakout pattern are often quickly exceeded as momentum builds; the current target overshoot may simply reflect the speed of the recent price move rather than a permanent overvaluation. | ||
Business quality is at the minimum threshold of 3.0 out of 10 with free cash flow at only 30% of net income, near-zero gross margins in a healthcare services context, and no identified competitive moat, indicating the business generates minimal economic surplus above its operating costs.
→StableQuality breakdown
- Expectation
- Quality score improves above 4.0 and free cash flow as a percentage of net income rises above 50% within 12 months.
CounterSpecialty hospital and rehabilitation facility operators typically require significant ongoing capital investment that suppresses free cash flow ratios; the absolute quality score may overstate the structural weakness relative to sector-specific benchmarks.
The stock trades at a forward price-to-earnings of 12.1x with a PEG of 0.43, placing it at an attractive value for a healthcare company and suggesting it may be near the trough of a negative earnings revision cycle.
→StableValuation breakdown
- Expectation
- Price rises above $20, more than 20% above the current $16.65, within 12 months if the earnings revision cycle reverses and estimates stabilize.
CounterA PEG of 0.43 when earnings estimates have declined -29.7% in 30 days indicates the denominator — growth — may be inflated by forward estimates that themselves are at risk of further reduction; the cheap multiple may not be stable.
Earnings estimates have declined -29.7% over the past 30 days — the most severe near-term downward revision in the current analysis batch — indicating that analysts are materially reducing their expectations for the company's near-term profitability.
→StableCatalyst breakdown
- Expectation
- The rate of downward earnings revisions slows to less than -5% over the next 30-day period, signaling the revision cycle is stabilizing.
CounterSharp downward estimate revisions often overshoot in both speed and magnitude; if the actual business trajectory is better than the revised estimates, the stock could recover faster than the consensus currently implies.
The stock trades at $16.65 above the analyst technical target of $16.37 with negative asymmetry of -1.7%, meaning that at current prices the stock has already exceeded what the technical framework considers fair value, creating an unfavorable entry situation despite the breakout pattern.
→StableTargets
- Expectation
- Analyst consensus price target rises above $20, more than 20% above the current $16.65, reflecting upward revisions after a stabilization of the earnings estimate cycle.
CounterTechnical price targets in a golden cross breakout pattern are often quickly exceeded as momentum builds; the current target overshoot may simply reflect the speed of the recent price move rather than a permanent overvaluation.
Per-dimension breakdown
Quality
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.3 |
| ROA | 2.3 |
| Gross margin | 0.0 |
| Op margin | 2.8 |
| Net margin | 1.2 |
| Current ratio | 4.4 |
| FCF quality | 2.4 |
| Moat | 3.8 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: 30% FCF/NI
- ▸No competitive moat
- ▸Quality concerns
Growth
5.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.8 |
| EPS growth | 7.6 |
Momentum
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 3.8 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.2 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.0 |
| erm sentiment | 0.0 |
- ▸Estimates falling as sentiment proxy (-29.7%)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.9 |
| quality rank | 3.0 |
| growth rank | 4.1 |
Technical
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.5 |
| support resistance | 5.4 |
| 52w position | 9.7 |
Risk (lower is worse)
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.3 |
| days to cover | 9.4 |
| volatility | 10.0 |
| implied vol | 0.0 |
| beta | 8.2 |
| debt equity | 4.2 |
- ▸High IV: 87%
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 1.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 6.5 |
| dividend safety | 5.2 |
- ▸Estimates down -29.7% (30d)
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 151.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:6.2>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:36d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.0=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.98
Upside
-14.7%
Downside
15.0%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $2.1B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 7.5 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-1.0=NEGATIVE.
The strongest dimensions are Value at 7.5, Risk (lower is worse) at 6.7, and Technical at 6.5; the weakest are Quality at 3.0, Sentiment at 3.6, and Peer rank at 3.7. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.98 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The stock trades at a forward price-to-earnings of 12.1x with a PEG of 0.43, placing it at an attractive value for a healthcare company and suggesting it may be near the trough of a negative earnings revision cycle.
Trip ifForward price-to-earnings expands above 18x on downward earnings revisions, indicating the multiple has become more expensive rather than cheaper as estimates fall.
- P2Earnings estimates have declined -29.7% over the past 30 days — the most severe near-term downward revision in the current analysis batch — indicating that analysts are materially reducing their expectations for the company's near-term profitability.
Trip ifEarnings estimates decline by more than 40% over any 30-day period, exceeding the current -29.7% rate of revision.
- P3The stock trades at $16.65 above the analyst technical target of $16.37 with negative asymmetry of -1.7%, meaning that at current prices the stock has already exceeded what the technical framework considers fair value, creating an unfavorable entry situation despite the breakout pattern.
Trip ifAnalyst consensus price target falls below $14, more than 16% below the current price of $16.65, indicating further fundamental deterioration is expected.
- P4Business quality is at the minimum threshold of 3.0 out of 10 with free cash flow at only 30% of net income, near-zero gross margins in a healthcare services context, and no identified competitive moat, indicating the business generates minimal economic surplus above its operating costs.
Trip ifQuality score falls below 2.5 or free cash flow as a percentage of net income falls below 10%, declining more than 20 percentage points from the current 30% level.