Value
7.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.7 |
| EV/EBITDA | 6.1 |
| Fwd P/E | 6.9 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 18.2x
- ▸PEG: 0.16
- ▸Attractively valued
ACHC · Why this verdict
Why Acadia Healthcare Company (ACHC) 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 score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With 57.7% of revenue derived from Medicaid, the business faces concentrated exposure to government reimbursement rates and policy decisions — any reduction in Medicaid funding or rate compression would materially impair revenues. Bear case | If commercial and self-pay revenue grows to represent more than 55% of total revenue within 12 months, the Medicaid concentration risk would diminish meaningfully. | →Stable |
| CounterMedicaid is a durable, counter-cyclical payer for behavioral health services; patients in these programs represent stable, recurring demand that is less susceptible to economic softness than commercial insurance payers. | ||
Free cash flow is negative at approximately 6% of revenue, meaning the business is consuming cash despite reporting positive net income — a structural quality gap that limits financial flexibility and raises questions about earnings sustainability. Quality breakdown | Free cash flow turns positive and represents at least 5% of revenue for 2 consecutive quarters. | →Stable |
| CounterA Piotroski F-Score of 8 out of 9 reflects broadly improving financial signals across the balance sheet; the negative free cash flow may reflect capital expenditures associated with capacity expansion that could drive future revenue growth. | ||
With only 0.5% headroom to the near-term price target and a reward-to-risk ratio of approximately 0.07-to-1, the stock is essentially priced at its near-term ceiling — there is no geometric entry case at current levels. Price targets | A reset to a higher analyst price target with upside exceeding 15% would need to emerge before a new entry becomes defensible. | →Stable |
| CounterStrong momentum with the stock above its 200-day moving average, a bullish MACD, and rising on-balance volume suggest the price could break above resistance and reset the target higher, potentially creating fresh upside. | ||
Short interest of 39% reflects deep market skepticism about the fundamental trajectory — at this level, short sellers are making a material and costly bet against the stock, typically signaling serious concerns about business quality or forward earnings visibility. Risk breakdown | Short interest declining to below 20% over 12 months would indicate that fundamental concerns are resolving and bears are covering. | →Stable |
| CounterA 39% short position creates significant squeeze potential; if the business delivers consecutive earnings beats — as it has in recent quarters — forced short covering could produce an outsized price move even without fundamental improvement. | ||
With 57.7% of revenue derived from Medicaid, the business faces concentrated exposure to government reimbursement rates and policy decisions — any reduction in Medicaid funding or rate compression would materially impair revenues.
→StableBear case
- Expectation
- If commercial and self-pay revenue grows to represent more than 55% of total revenue within 12 months, the Medicaid concentration risk would diminish meaningfully.
CounterMedicaid is a durable, counter-cyclical payer for behavioral health services; patients in these programs represent stable, recurring demand that is less susceptible to economic softness than commercial insurance payers.
Free cash flow is negative at approximately 6% of revenue, meaning the business is consuming cash despite reporting positive net income — a structural quality gap that limits financial flexibility and raises questions about earnings sustainability.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and represents at least 5% of revenue for 2 consecutive quarters.
CounterA Piotroski F-Score of 8 out of 9 reflects broadly improving financial signals across the balance sheet; the negative free cash flow may reflect capital expenditures associated with capacity expansion that could drive future revenue growth.
With only 0.5% headroom to the near-term price target and a reward-to-risk ratio of approximately 0.07-to-1, the stock is essentially priced at its near-term ceiling — there is no geometric entry case at current levels.
→StablePrice targets
- Expectation
- A reset to a higher analyst price target with upside exceeding 15% would need to emerge before a new entry becomes defensible.
CounterStrong momentum with the stock above its 200-day moving average, a bullish MACD, and rising on-balance volume suggest the price could break above resistance and reset the target higher, potentially creating fresh upside.
Short interest of 39% reflects deep market skepticism about the fundamental trajectory — at this level, short sellers are making a material and costly bet against the stock, typically signaling serious concerns about business quality or forward earnings visibility.
→StableRisk breakdown
- Expectation
- Short interest declining to below 20% over 12 months would indicate that fundamental concerns are resolving and bears are covering.
CounterA 39% short position creates significant squeeze potential; if the business delivers consecutive earnings beats — as it has in recent quarters — forced short covering could produce an outsized price move even without fundamental improvement.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Acadia Healthcare has beaten earnings estimates in all four recent quarters, but the stock has essentially reached its near-term target with only 0.5% upside remaining, the underlying business generates negative free cash flow at roughly 6% of revenue, and 39% short interest reflects broad market skepticism about the fundamental outlook.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 2.8 |
| Gross margin | 4.4 |
| Op margin | 4.0 |
| Net margin | 0.0 |
| Current ratio | 6.1 |
| FCF quality | 0.0 |
| Moat | 4.4 |
| Piotroski F | 8.9 |
- ▸Cash-burning: FCF -6% of revenue
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
7.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.4 |
| EPS growth | 10.0 |
Momentum
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.2 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 1.6 |
- ▸Overbought (RSI 76)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.2 |
| Price target | 3.9 |
| erm sentiment | 5.5 |
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
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.0 |
| quality rank | 0.2 |
| growth rank | 5.1 |
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.4 |
| support resistance | 1.8 |
| 52w position | 8.9 |
Risk (lower is worse)
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.1 |
| days to cover | 1.6 |
| volatility | 1.2 |
| put call | 10.0 |
| implied vol | 4.2 |
| beta | 9.1 |
| debt equity | 4.5 |
- ▸High short interest justified: 34%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:7.0>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:24d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.3=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.28
Upside
-19.2%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 24d with 4/4 beat streak
SuitabilityAggressive — MCap $2.9B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Catalyst at 7.5 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-1.3=NEGATIVE.
The strongest dimensions are Catalyst at 7.5, Growth at 7.2, and Value at 7.1; the weakest are Peer rank at 2.8, Quality at 3.4, and Technical at 3.7. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.28 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Medicaid Concentration Policy Risk
Trip ifMedicaid revenue falls below 45% of total revenue for 2 consecutive quarters.
- P2Negative Free Cash Flow
Trip ifFree cash flow turns positive and exceeds 5% of revenue for 2 consecutive quarters.
- P3Target Reached No Entry Case
Trip ifPrice surpasses $30.00 and a new analyst consensus target above $35.00 establishes upside exceeding 15%.
- P4Extreme Short Interest Skepticism
Trip ifShort interest falls below 20% within 12 months.