Value
7.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.9 |
| EV/EBITDA | 4.9 |
| Fwd P/E | 5.5 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 23.3x
- ▸PEG: 0.11
- ▸Attractively valued
SGRY · Why this verdict
Why Surgery Partners (SGRY) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Surgery Partners operates ambulatory surgery centers with 52% revenue concentration from private insurance payors and a quality score below minimum thresholds, making it a structurally risky holding despite positive short-term momentum and an attractive forward valuation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Private insurance payors account for 52% of the company's revenue — a high-severity concentration risk meaning that any changes to commercial reimbursement rates, payor contracts, or network status could materially impair more than half of revenues. Bear case | The company discloses that private insurance concentration falls below 45% of revenues over the next 12 months through payor diversification or government program growth. | →Stable |
| CounterPrivate insurance concentration is typical for ambulatory surgery centers; the company has likely managed this risk for years and has established contracts that provide revenue predictability. | ||
The overall quality score of 3.1 is below the minimum acceptable threshold of 4.0, with near-zero return on equity and no competitive moat, indicating the business does not demonstrate the financial quality characteristics needed to sustain outperformance. Warnings | Quality score improves to above 4.0 within 12 months as earnings growth and margin expansion improve the underlying business fundamentals. | →Stable |
| CounterAmbulatory surgery center businesses often carry low reported ROE during periods of acquisition-driven expansion; the quality metrics may improve substantially once integration costs normalize. | ||
Short interest at 21% of the float combined with an elevated put-to-call ratio of 1.57 and implied volatility of 89% indicates that institutional investors are actively positioning for downside, a strong headwind for any near-term price recovery. Key risks | Short interest falls below 12% of the float over the next 12 months as the bear thesis weakens on improving fundamentals. | →Stable |
| Counter21% short interest creates a meaningful short-squeeze potential; a single positive earnings or reimbursement news event could trigger rapid covering and a sharp price rally. | ||
The stock is trading at an RSI of 75 — flagged as an overbought bear rally — while the 200-day moving average is declining at 7.3% per 30 days in a confirmed downtrend, creating a technically dangerous combination of short-term overbought conditions within a longer-term downtrend. Momentum breakdown | RSI pulls back to below 55 and the 200-day moving average slope turns flat or positive within 6 months, confirming sustainable technical improvement. | →Stable |
| CounterBear rallies can extend significantly beyond technical overbought signals if accompanied by improving fundamental news; the RSI level alone should not trigger an exit. | ||
Private insurance payors account for 52% of the company's revenue — a high-severity concentration risk meaning that any changes to commercial reimbursement rates, payor contracts, or network status could materially impair more than half of revenues.
→StableBear case
- Expectation
- The company discloses that private insurance concentration falls below 45% of revenues over the next 12 months through payor diversification or government program growth.
CounterPrivate insurance concentration is typical for ambulatory surgery centers; the company has likely managed this risk for years and has established contracts that provide revenue predictability.
The overall quality score of 3.1 is below the minimum acceptable threshold of 4.0, with near-zero return on equity and no competitive moat, indicating the business does not demonstrate the financial quality characteristics needed to sustain outperformance.
→StableWarnings
- Expectation
- Quality score improves to above 4.0 within 12 months as earnings growth and margin expansion improve the underlying business fundamentals.
CounterAmbulatory surgery center businesses often carry low reported ROE during periods of acquisition-driven expansion; the quality metrics may improve substantially once integration costs normalize.
Short interest at 21% of the float combined with an elevated put-to-call ratio of 1.57 and implied volatility of 89% indicates that institutional investors are actively positioning for downside, a strong headwind for any near-term price recovery.
→StableKey risks
- Expectation
- Short interest falls below 12% of the float over the next 12 months as the bear thesis weakens on improving fundamentals.
Counter21% short interest creates a meaningful short-squeeze potential; a single positive earnings or reimbursement news event could trigger rapid covering and a sharp price rally.
The stock is trading at an RSI of 75 — flagged as an overbought bear rally — while the 200-day moving average is declining at 7.3% per 30 days in a confirmed downtrend, creating a technically dangerous combination of short-term overbought conditions within a longer-term downtrend.
→StableMomentum breakdown
- Expectation
- RSI pulls back to below 55 and the 200-day moving average slope turns flat or positive within 6 months, confirming sustainable technical improvement.
CounterBear rallies can extend significantly beyond technical overbought signals if accompanied by improving fundamental news; the RSI level alone should not trigger an exit.
Per-dimension breakdown
Quality
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.9 |
| ROA | 2.5 |
| Gross margin | 0.6 |
| Op margin | 4.1 |
| Net margin | 0.0 |
| Current ratio | 6.6 |
| Moat | 3.8 |
| Piotroski F | 6.7 |
- ▸No competitive moat
Growth
6.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.6 |
| EPS growth | 10.0 |
Momentum
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.9 |
| MACD | 8.1 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Overbought bear rally (RSI 71)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -7.4%/30d — confirmed downtrend
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 7.4 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.1 |
| quality rank | 1.0 |
| growth rank | 3.7 |
Technical
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.5 |
| support resistance | 1.1 |
| 52w position | 2.7 |
Risk (lower is worse)
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.0 |
| days to cover | 2.2 |
| volatility | 3.6 |
| put call | 10.0 |
| implied vol | 3.3 |
| max pain risk | 3.0 |
| beta | 3.5 |
| debt equity | 4.7 |
- ▸High short interest: 21%
- ▸Above max pain $2
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 5.6 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:5.4>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:40d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.2<1.5@spot
Warning (2)
- MOMENTUM:5.4<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:momentum=5.4>=5.0 recovering
Reward-to-Risk
0.17
Upside
+2.4%
Downside
14.2%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 71
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.95>1.3, MCap $2.0B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 7.1 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:0.2<1.5@spot.
The strongest dimensions are Value at 7.1, Growth at 6.8, and Sentiment at 6.6; the weakest are Technical at 1.8, Quality at 3.1, and Peer rank at 3.2. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.17 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Private insurance payors account for 52% of the company's revenue — a high-severity concentration risk meaning that any changes to commercial reimbursement rates, payor contracts, or network status could materially impair more than half of revenues.
Trip ifPrivate insurance payor concentration rises above 60% of revenues in a company disclosure, increasing single-channel risk beyond the current high-severity threshold.
- P2The overall quality score of 3.1 is below the minimum acceptable threshold of 4.0, with near-zero return on equity and no competitive moat, indicating the business does not demonstrate the financial quality characteristics needed to sustain outperformance.
Trip ifQuality score remains below 3.5 for 2 consecutive reporting periods with no improvement in return on equity above 2%.
- P3Short interest at 21% of the float combined with an elevated put-to-call ratio of 1.57 and implied volatility of 89% indicates that institutional investors are actively positioning for downside, a strong headwind for any near-term price recovery.
Trip ifShort interest rises above 25% of the float, more than 4 percentage points above current levels, signaling accelerating institutional bearishness.
- P4The stock is trading at an RSI of 75 — flagged as an overbought bear rally — while the 200-day moving average is declining at 7.3% per 30 days in a confirmed downtrend, creating a technically dangerous combination of short-term overbought conditions within a longer-term downtrend.
Trip ifRSI drops below 35 after the current overbought reading reverses, and the 200-day moving average continues to decline by more than 5% per 30 days.