2 Reasons to Like THC and 1 to Stay Skeptical

July 08, 2025 at 00:04 AM EDT

THC Cover Image

Tenet Healthcare currently trades at $173.09 and has been a dream stock for shareholders. It’s returned 876% since July 2020, blowing past the S&P 500’s 96.3% gain. The company has also beaten the index over the past six months as its stock price is up 32.9% thanks to its solid quarterly results.

Is it too late to buy THC? Find out in our full research report, it’s free.

Why Does THC Stock Spark Debate?

With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE: THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.

Two Things to Like:

1. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Tenet Healthcare’s EPS grew at an astounding 30.7% compounded annual growth rate over the last five years, higher than its 2.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Tenet Healthcare Trailing 12-Month EPS (Non-GAAP)

2. New Investments Bear Fruit as ROIC Jumps

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Tenet Healthcare’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Tenet Healthcare Trailing 12-Month Return On Invested Capital

One Reason to be Careful:

Same-Store Sales Falling Behind Peers

We can better understand Hospital Chains companies by analyzing their same-store sales. This metric measures the change in sales at brick-and-mortar locations that have existed for at least a year, giving visibility into Tenet Healthcare’s underlying demand characteristics.

Over the last two years, Tenet Healthcare’s same-store sales averaged 2.1% year-on-year growth. This performance slightly lagged the sector and suggests it might have to change its strategy or pricing, which can disrupt operations.

Tenet Healthcare Same-Store Sales Growth

Final Judgment

Tenet Healthcare’s merits more than compensate for its flaws, and with its shares topping the market in recent months, the stock trades at 14× forward P/E (or $173.09 per share). Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More Than Tenet Healthcare

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

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