- If you are wondering whether Select Medical Holdings is fairly priced or offering value at today’s levels, you are not alone. This article is built to help you judge the stock through a clear valuation lens.
- The share price closed at US$16.26 most recently, with returns of 0.0% over 7 days, 3.6% over 30 days, 9.7% year to date, a 2.5% decline over 1 year, a 26.2% gain over 3 years, and a 6.4% decline over 5 years. This gives a mixed picture for investors weighing risk and potential reward.
- Recent coverage around Select Medical has focused on its role in the US healthcare system, including attention on its inpatient rehabilitation and critical illness recovery operations, as investors reassess how hospitals and post acute providers fit into broader care trends. This backdrop helps frame the recent price moves as the market reacts to how such business models may handle evolving demand and reimbursement conditions.
- On our framework the company records a valuation score of 3 out of 6, which means it screens as undervalued on half of the checks we run. Next we will look at how different valuation approaches line up on the stock and finish with a way to view valuation that brings all of this together more clearly.
Approach 1: Select Medical Holdings Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and discounting them back to today’s value.
For Select Medical Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is reported at about $106.5 million. From there, Simply Wall St applies cash flow projections out to 2035, with analyst inputs typically covering the nearer years and the later years extrapolated.
Across the 10 year projection period shown, forecast free cash flows range from about $69.2 million in 2026 to $37.7 million in 2035, with each year discounted back to a present value in dollars. Adding these discounted cash flows together gives an estimated intrinsic value per share of about $5.70.
Compared with the recent share price of US$16.26, the DCF output suggests the stock is around 185.4% above this intrinsic value estimate, which points to a rich valuation on this model alone.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Select Medical Holdings may be overvalued by 185.4%. Discover 48 high quality undervalued stocks or create your own screener to find better value opportunities.
Approach 2: Select Medical Holdings Price vs Earnings
For a profitable company like Select Medical Holdings, the P/E ratio is a useful way to relate what you pay for the stock to the earnings it generates. In general, higher expected growth and lower perceived risk can justify a higher P/E, while slower growth or higher risk usually point to a lower, more cautious multiple.
Select Medical currently trades on a P/E of 14.1x. That compares with an average P/E of 22.4x for the Healthcare industry and a peer average of 25.9x, so the stock sits below both broader reference points. Simply Wall St also calculates a Fair Ratio of 17.4x. This is the P/E level that could be reasonable given factors such as the company’s earnings profile, industry, profit margins, market value and identified risks.
This Fair Ratio is more tailored than a simple peer or industry comparison because it looks at company specific traits rather than assuming all Healthcare names deserve the same multiple. Lining up the figures, Select Medical’s current 14.1x P/E is below the 17.4x Fair Ratio. This indicates that the shares appear undervalued on this metric.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Select Medical Holdings Narrative
Earlier we mentioned that there is an even better way to understand valuation. Narratives let you attach your own story about Select Medical Holdings to the numbers by linking your assumptions for revenue, earnings and margins into a forecast, turning that into a Fair Value, and then comparing it with the current price inside Simply Wall St’s Community page. Different Narratives automatically refresh when new news or earnings arrive. For example, one investor might lean toward a more cautious view that lines up with a Fair Value around US$16.50, while another might lean toward a more optimistic view closer to US$20. Seeing those side by side can help you decide whether the current price looks high or low relative to the story you believe.
Do you think there's more to the story for Select Medical Holdings? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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