As of May 24, 2025, Surgery Partners Inc's estimated intrinsic value ranges from $11.94 to $40.41 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $40.41 | +77.2% |
| Discounted Cash Flow (5Y) | $33.89 | +48.7% |
| Dividend Discount Model (Multi-Stage) | $11.94 | -47.6% |
| Earnings Power Value | $26.98 | +18.3% |
Is Surgery Partners Inc (SGRY) undervalued or overvalued?
With the current market price at $22.80, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Surgery Partners Inc's intrinsic value, including:
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 | 0.87 | 1.05 |
| Cost of equity | 7.9% | 10.7% |
| Cost of debt | 7.0% | 7.5% |
| Tax rate | 17.8% | 49.3% |
| Debt/Equity ratio | 1.15 | 1.15 |
| After-tax WACC | 6.7% | 7.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $34 | $7,666M | 83.3% |
| 10-Year Growth | $40 | $8,502M | 70.1% |
| 5-Year EBITDA | $12 | $4,813M | 73.4% |
| 10-Year EBITDA | $18 | $5,662M | 55.1% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $465M |
| Discount Rate (WACC) | 7.0% - 6.7% |
| Enterprise Value | $6,636M - $6,923M |
| Net Debt | $3,322M |
| Equity Value | $3,314M - $3,602M |
| Outstanding Shares | 128M |
| Fair Value | $26 - $28 |
| Selected Fair Value | $26.98 |
| Metric | Value |
|---|---|
| Market Capitalization | $2923M |
| Enterprise Value | $6244M |
| Trailing P/E | 0.00 |
| Forward P/E | 23.32 |
| Trailing EV/EBITDA | 9.60 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | -100.00% |
| Debt-to-Equity Ratio | 1.15 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $12.12 |
| Discounted Cash Flow (5Y) | 29% | $8.47 |
| Dividend Discount Model (Multi-Stage) | 24% | $2.39 |
| Earnings Power Value | 12% | $2.70 |
| Weighted Average | 100% | $30.21 |
Based on our comprehensive valuation analysis, Surgery Partners Inc's weighted average intrinsic value is $30.21, which is approximately 32.5% above the current market price of $22.80.
Key investment considerations:
Given these factors, we believe Surgery Partners Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.