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Tenet Healthcare (THC): Rethinking Valuation After a 68% Year‑to‑Date Share Price Surge

Simply Wall St · 1d ago

Tenet Healthcare (THC) has quietly rerated this year, with shares up about 68% year to date despite a flat past month. This performance is putting fresh attention on whether the current valuation still leaves upside.

See our latest analysis for Tenet Healthcare.

The recent pause in Tenet Healthcare’s share price comes after a powerful run, with a roughly 68% year to date share price return and very strong multi year total shareholder returns. This suggests momentum is still broadly intact rather than fading.

If Tenet’s move has you rethinking your healthcare exposure, this could be a good moment to explore other opportunities across healthcare stocks and see what else fits your strategy.

With shares near record highs, solid earnings growth, and analysts still seeing upside, investors face a key question: is Tenet Healthcare still trading below its true value, or is the market already pricing in years of future growth?

Price to Earnings of 13.6x: Is it justified?

On a last close of $210, Tenet Healthcare trades at a price to earnings ratio of 13.6x, which screens as undervalued versus both peers and intrinsic value estimates.

The price to earnings multiple compares what investors pay today for each dollar of current earnings, a central yardstick for mature, profitable healthcare operators. For Tenet, a 13.6x multiple looks modest given its established hospital and ambulatory network, consistent profitability, and track record of long term total returns.

Relative to valuation anchors, the gap is striking. Tenet is assessed as trading at good value compared to peers and the wider US healthcare industry, with its 13.6x ratio sitting well below the peer average of 22.8x and the industry average of 22.4x. This implies the market is pricing in more muted earnings power than those benchmarks. Against an estimated fair price to earnings ratio of 24.6x, the current level also appears compressed. This hints at significant room for the multiple to expand if fundamentals stay on track and sentiment normalizes.

Explore the SWS fair ratio for Tenet Healthcare

Result: Price to Earnings of 13.6x (UNDERVALUED)

However, risks remain, including potential reimbursement pressure, regulatory changes, or weaker procedure volumes that could cap multiple expansion and challenge the bullish thesis.

Find out about the key risks to this Tenet Healthcare narrative.

Another View: Checking the DCF

Our DCF model paints an even starker picture, suggesting Tenet Healthcare’s fair value sits near $374 per share, roughly 44% above the current $210 price. That points to deep undervaluation, but it also raises a question: are the cash flow assumptions too generous for a capital intensive operator?

Look into how the SWS DCF model arrives at its fair value.

THC Discounted Cash Flow as at Dec 2025
THC Discounted Cash Flow as at Dec 2025

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Tenet Healthcare for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Tenet Healthcare Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just minutes. Do it your way.

A great starting point for your Tenet Healthcare research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Take the next step now, or risk missing smart opportunities, by using the Simply Wall St screener to pinpoint stocks that match your strategy with precision.

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.