Community Health Systems Overvalued

Those who have been following Community Health Systems since the firm's stock tumbled in October 2016 following the $7.6B merger with HMA may be wondering if the hospital giant has found its footing after three consecutive quarters of being EPS positive, rallying stock prices to a 52-week high record of $11.04/share. Today, I am here to tell you that this stock is very much overpriced compared to the firm's current market value.

Highlights (Quarter by Quarter Fundamental Analysis )
Short-term assets such as Cash and Cash equivalence have increased again by 17% to 1.8B, while receivables and inventory have decreased, signaling that Community Health Systems could be improving their asset turnover or we will see a decrease in net income next quarter. Total assets have slightly increased while debts have slightly decreased resulting in a 2% decrease in debt-to-assets, however, the firm has continued the trend of financing assets with more debt with a 5% increase in debt-to-equity from 28.1% to 29.5%. CYH also maintains an enterprise value far greater than their market cap value. CYH has continued the trend of cutting SGA expenses. Although we see a reduction in FCF , it remains positive.

Using the DCF model, we have a fair-market-value of about $6.30/share.

(One-year Chart using Technical Analysis )
Upon reviewing the charts, we will most likely see a decline in the stock's price. The RSI and MACD are bearish while the price is testing the 20 EMA . Analyzing the volume , we are seeing that the bulls are starting to lose momentum.

Short/put - $5.70 (low confidence) to $6.30 (high confidence)


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