PACS Group Inc. Common Stock (PACS)

FairStock Score: 49/100 — MIXED

Key Financials

Strengths

• Generates $242 million in annual free cash flow (4.4% yield on market cap)
• High return on equity of 23.0% demonstrating efficient capital deployment
• Established organization with 47,455 employees providing operational scale

Concerns

• Trades significantly above Graham Number ($13) with negative 171% margin of safety—limited downside protection
• High leverage at 3.78x debt-to-equity increases financial risk and interest expense burden
• Altman Z-Score of 1.1 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

PACS Group Inc. Common Stock is a small-cap healthcare company valued at $5.5 billion. The business generates $5.3 billion in annual revenue with a 1.1% net margin and $242 million in free cash flow. From a quality standpoint, PACS shows solid Piotroski F-Score of 6/9 and distressed Altman Z-Score of 1.1 warrants caution. On valuation, the stock is trading at a premium 28.7x earnings, with trades far above its Graham Number ($13) with no margin of safety. Growth dynamics show revenue growing at 12.4% and profit growth of 60.5%. Our composite FairStock Score of 49/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $242 million in annual free cash flow (4.4% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Elevated leverage at 3.8x D/E means rising interest rates or revenue weakness could strain debt covenants and force asset sales at distressed prices. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer