What is RHE's Intrinsic value?

Regional Health Properties Inc (RHE) Intrinsic Value Analysis

Executive Summary

As of June 10, 2025, Regional Health Properties Inc's estimated intrinsic value ranges from $20.34 to $20.34 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $20.34 +633.3%

Is Regional Health Properties Inc (RHE) undervalued or overvalued?

With the current market price at $2.77, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Regional Health Properties Inc's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 2.78 5.9
Cost of equity 16.7% 37.9%
Cost of debt 4.8% 7.0%
Tax rate 26.2% 27.0%
Debt/Equity ratio 11.91 11.91
After-tax WACC 4.6% 7.7%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $4M
Discount Rate (WACC) 7.7% - 4.6%
Enterprise Value $58M - $96M
Net Debt $46M
Equity Value $12M - $51M
Outstanding Shares 2M
Fair Value $8 - $33
Selected Fair Value $20.34

Key Financial Metrics

Metric Value
Market Capitalization $4M
Enterprise Value $50M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 3.95
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 90.10%
Debt-to-Equity Ratio 11.91

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $2.03
Weighted Average 100% $20.34

Investment Conclusion

Based on our comprehensive valuation analysis, Regional Health Properties Inc's weighted average intrinsic value is $20.34, which is approximately 633.3% above the current market price of $2.77.

Key investment considerations:

  • Strong projected earnings growth (-23% to -6% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 90.10%

Given these factors, we believe Regional Health Properties Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.