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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
R1 Rcm Holdco Inc. (XNAS:RCM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
RCM
Name:
R1 RCM HOLDCO INC. (XNAS:RCM)
Sector:
20.90M
Industry:
Health Information Services
CEO:
Mr. Joseph Flanagan
Total Employees:
10,200
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -59.58% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF R1 RCM HOLDCO INC.(RCM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND HEALTH INFORMATION SERVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
20.63
One Month Price Target:
$20.74
Six Month Price Target :
$21.29
Likely Price in One Year's Time:
Ticker:
$21.95
Likely Trading Range Today Under (Normal Volatility)
$20.55
Price Upper limit ($) :
$20.76
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$19.36
This week:
$17.78
This month :
$14.93
Other Primary facts
Market Cap:
8.55B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
416.07M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
19.82%
-21.68%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$26.54
$23.79
$14.72
$17.47
Medium risk (<10%) entry points
Buy Call
Sell Call
$22.90
Buy Put:
Sell Put:
$22.32
$18.35
$18.94
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
RCM
Sharpe Ratio:
3.64%
Comparison:
RCM, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 254.53% higher than the industry
& ratio is 59.76% higher than the market/S&P 500 average
Average Returns/Yield of
RCM
Daily returns:
0.12%
Weekly returns:
0.60%
Monthly returns:
2.41%
Yearly returns:
5.07%
Comparison of returns:
Average annual returns/yield (last 3 years) is 469.76% above industry average
Classification:
RCM, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.44
Statistical test of Returns:
RCM has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.06%
Weekly Volatility:
6.85%
Monthly Volatility:
13.71%
Yearly Volatility:
47.48%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
3.38%
Volatility in last five trading days has been 10.33% above long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.17%
Weekly VaR:
-13.81%
Monthly VaR:
-27.61%
How Much Can the price of
RCM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-23%
Worst case (decline):
>85%
This translates to price declining to:
$15.88
This translates to price declining to:
$3.09
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
RCM is a 94.89% riskier investment compared to the market/S&P 500 & is 66.96% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -9.88% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
RCM
Beta in relation to market/S&P 500--0.95
Expected beta in 1 year's time:
0.727
Expected beta in 3 year's time:
1.028
Unlevered (debt free) Beta:
0.355
Beta in relation to Nasdaq (XNAS):
0.669
Beta in relation to all global stocks::
0.941
Beta Comparison & Analysis
Beta of competitors/peers::
0.938
Beta is 1.23% higher than peers
Average Industry Beta:
0.87
Beta is 9.18% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
54.41%
Sustainable growth rate is 299.61% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.193
Alpha is -577.09% below industry average alpha yield
Alpha is 1226% higher than market/& is unsustainably high
Analysis of Cost of Capital of
RCM
Equity cost of capital:
0.097
Equity cost of capital is 6.01% above industry mean WACC
Unlevered (without debt) cost of capital:
3.61%
Before-tax cost of debt:
2.35%
After-tax cost of debt:
1.85%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.85%
WACC is -36.60% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$3.65
Revenue growth rate per share of (3Y):
23.42
Annual revenue growth rate is -108.88% below industry average
EPS:
$0.33
Expected Annual growth rate of EPS (3Y):
185.41%
Expected future EPS growth rate is 290.36% higher than the Health Information Services industry
Free cash flow (FCF) per share:
$0.68
-
-
Debt per share
$1.94
EBITDA per share
$0.55
Valuation Analysis Today of
RCM
P/E Ratio:
100.72
P/E Ratio of Competitors/Peers:
412.76
P/E ratio is -75.60% lower than main peers & is -72.44% lower than the industry
Stock price/value with industry average P/E ratio: $120.60
RCM is -82.89% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
5.66
Price to sales ratio is -25.39% below the industry mean
P/B (Price to book value ratio):
23.42
Price to free cash flow: 30.50
Price to free cash flow ratio is -73.07% lower than the industry
Net income growth rate (3Y):
-187.20%
Net income growth rate is -110.68% lower than the industry average net income growth rate
Dividend Analysis
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-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
220.49%
Net debt to equity ratio:
195.12%
Debt to assets ratio:
56.26%
Net debt to assets ratio:
49.79%
Debt-to-asset ratio is 64.70% above industry average
Ability to repay debt:
Interest coverage ratio:
11.71
Interest coverage ratio is -22.29% less than industry average
Looking forward:
Debt growth rate:
33.04%
Annual debt growth is -21% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.54%
Analysis of Key Statistics
Correlation of price movement with the market:
0.422
Statistical significance of correlation:
RCM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.376
Stock price is 12.20% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.376
Correlation of price movement with Nasdaq (^IXIC):
-0.028
Covariance of price movement with the market:
-0.05
Kurtosis
8.956
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.3
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
RCM
Gross Profit Margin Ratio:
85%
Operating Profit Margin Ratio:
10.02%
Operating profit margin is -156.11% lower than the industry
Net Profit Margin Ratio:
85%
Effective Tax Rate:
23.87%
Effective tax rate is 20.50% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
27.50%
Return on equity (ROE) is -943.63% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
7.02%
Return on assets (ROA) is -504.26% lower than the industry
Financial Leverage:
2.3x
Current Ratio:
1.54
Current ratio is -72.71% below industry average
Cash Conversion Cycle (days):
17
Cash conversion cycle is -65.47% below industry average
The remaining useful life of property plant & equipment is: 0.0 years
Stock based compensation to net income ratio:
10.02%
In-depth Efficiency Analysis
Revenue generated per employee:
148.8K
Each employee generates -64% less revenue than industry average revenue per employee
EBITDA generated per employee:
22.6K
Each employee generates -155% less EBITDA than industry average revenue per employee
Profit generated per employee:
9.9K
Each employee generates -112% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
2.0K
Each employee generates -84% less free cash flow than industry average revenue per employee
Assets/Capital per employee
107.4K
Each employee generates -84% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
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Competitors/Peer firms of
RCM
CHANGE HEALTHCARE INC. (XNAS:CHNG)
PT INOCYCLE TECHNOLOGY GROUP Tbk (XIDX:INOV)
Ascendis Pharma A/S (XNAS:ASND)
ARROWHEAD PHARMACEUTICALS, INC. (XNAS:ARWR)
Legend Biotech Corporation (XNAS:LEGN)
SOTERA HEALTH COMPANY (XNAS:SHC)
NOVOCURE LIMITED (XNAS:NVCR)
SHOCKWAVE MEDICAL, INC. (XNAS:SWAV)
EXELIXIS, INC. (XNAS:EXEL)
Current Analyst Ratings
Strong buy�0%
Buy�4%
Hold�8%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
1.52B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.19B
325.60M
-
-
123.30M
-
-
123.30M
-
19.70M
78.50M
230.60M
152.10M
100.80M
132.40M
31.60M
100.80M
Statement of Cash Flow
Date:
Period:
18.90M
Differed Income Tax :
7.30M
Stock Based Compensation :
10.10M
Change in Working Capital :
- 41800.00K
Accounts Receivables:
22.10M
Other Working Capital:
- 46200.00K
Other Non-Cash Items:
7.00M
Net Cash Provided by Operating Activities:
30.90M
Investments in PP&E:
- 10000.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
123.90M
-
123.90M
135.30M
-
81.20M
340.40M
144.80M
554.70M
258.30M
-
44.20M
93.90M
1.10B
-
1.44B
21.00M
30.90M
-
39.60M
130.00M
221.50M
808.10M
21.40M
848.30M
-
1.07B
3.00M
- 34900.00K
- 6600.0K
-
March 31, 2022 at 6:00:00 AM
1.32B
366.50M
1.44B
-
839.00M
715.1M
-
-
- 10000.00K
- 4400.00K
-
- 22100.00K
-
300.00K
- 26200.00K
- 900.00K
- 6200.00K
123.90M
130.10M
30.90M
- 10000.00K
20.90M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
RCM
2023
2024
2025
2026
2027
$22.06
$143.22
$152.36
$162.09
$172.43