The Pennant Group Inc. Common Stock (PNTG)

FairStock Score: 52/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look for businesses that earn high returns on capital and sell at sensible prices. Pennant operates home health, hospice, and senior living services, with 9,700 employees. It is a real, necessary service, but the financials show a thin-margin, leveraged operator. In fiscal Q2 2026, the quarter ended 2026-06-30, revenue was $298.0M, net income $9.1M, and diluted EPS $0.25. That is a 3.05% net margin. Compare fiscal Q2 2025, the quarter ended 2025-06-30: revenue $219.5M, net income $7.1M, EPS $0.20. Growth is evident. In fiscal year 2023, period ended 2023-12-31, revenue was $544.9M and net income $13.4M; by fiscal year 2025, period ended 2025-12-31, revenue was $947.7M and net income $29.6M. That is impressive expansion. Yet quality is not Berkshire-grade: FairStock calculates ROE 10.42%, ROCE 4.50%, D/E 1.23, Altman Z 1.85, and Piotroski 5/9. Trailing free cash flow is $34.7M, but FairStock's FCF yield is only 2.5%. The moat, if any, comes from local referral relationships and regulation, not pricing power; margins are too low. Valuation is the rub. At the 2026-10-13 close of $40.15, FairStock calculates P/E 44.12, P/B 3.92, EV/EBITDA 25.62, and Graham Number $14.53, a -176.32% margin of safety. PEG 0.88 offers a growth-adjusted counterpoint, and the Lynch category is stalwart. Still, I prefer paying a fair price for a wonderful business. This looks like a good operator priced for continued rapid growth, with little room for error.

In plain English: Pennant Group provides home health, hospice, and senior living services through local agencies. Revenue and profit have been growing, but profit margins are thin and the company uses a fair amount of debt. At the recent price of $40.15, the stock looks expensive compared with current earnings and book value, even though growth has been strong.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer