An analyst sees good growth prospects for R1 RCM Inc. (RCM)

R1 RCM Inc. (NASDAQ: RCM) stock jumped 1.35% on Tuesday to $13.50 against a previous-day closing price of $13.32. With 2.63 million shares changed hands, the volume of the stock remained lighter than its average volume of 5.38 million shares. During the session, the Health Information Services company that operates in wider Healthcare sector, reached to the highest price of $13.61 whereas the lowest price it dropped to was $13.21. The 52-week range on RCM shows that it touched its highest point at $27.86 and its lowest point at $6.71 during that stretch. It currently has a 1-year price target of $15.33. Beta for the stock currently stands at 0.68.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of RCM was up-trending over the past week, with a rise of 2.74%, but this was up by 22.17% over a month. Three-month performance dropped to -19.26% while six-month performance fell -43.09%. The stock lost -37.33% in the past year, while it has gained 23.29% so far this year. A look at the trailing 12-month EPS for RCM yields 0.08 with Next year EPS estimates of 0.21. For the next quarter, that number is -0.05. This implies an EPS growth rate of -785.00% for this year and 261.50% for next year. EPS is expected to decline by -2.50% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of -37.10%.

Float and Shares Shorts:

At present, 417.70 million RCM shares are outstanding with a float of 303.12 million shares on hand for trading. On Oct 13, 2022, short shares totaled 10.91 million, which was 2.61% higher than short shares on Sep 14, 2022. In addition to Mr. Joseph Gerard Flanagan as the firm’s CEO & Director, Ms. Rachel Wilson serves as its Exec. VP, CFO & Treasurer.

Institutional Ownership:

Through their ownership of 76.56% of RCM’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 34.11% of RCM, in contrast to 18.42% held by mutual funds. Shares owned by individuals account for 17.51%. As the largest shareholder in RCM with 3.41% of the stake, BlackRock Fund Advisors holds 14,210,782 shares worth 14,210,782. A second-largest stockholder of RCM, The Vanguard Group, Inc., holds 13,604,884 shares, controlling over 3.27% of the firm’s shares. AllianceBernstein LP is the third largest shareholder in RCM, holding 10,203,602 shares or 2.45% stake. With a 1.02% stake in RCM, the iShares Core S&P Mid Cap ETF is the largest stakeholder. A total of 4,240,538 shares are owned by the mutual fund manager. The iShares Russell 2000 ETF, which owns about 0.80% of RCM stock, is the second-largest Mutual Fund holder. It holds 3,346,581 shares valued at 36.65 million. Vanguard Total Stock Market Index holds 0.77% of the stake in RCM, owning 3,193,070 shares worth 34.96 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for RCM since 14 analysts follow the stock currently. There are 12 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 1 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With RCM analysts setting a high price target of $25.00 and a low target of $11.00, the average target price over the next 12 months is $15.07. Based on these targets, RCM could surge 85.19% to reach the target high and fall by -18.52% to reach the target low. Reaching the average price target will result in a growth of 11.63% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. RCM will report FY 2022 earnings on 02/15/2024. Analysts have provided yearly estimates in a range of $0.73 being high and $0.24 being low. For RCM, this leads to a yearly average estimate of $0.43. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. R1 RCM Inc. surprised analysts by -$0.06 when it reported $0.08 EPS against a consensus estimate of $0.14. The surprise factor in the prior quarter was $0.09. Based on analyst estimates, the high estimate for the next quarter is $0.19 and the low estimate is -$0.13. The average estimate for the next quarter is thus $0.02.

Summary of Insider Activity:

Insiders traded RCM stock several times over the past three months with 3 Buys and 0 Sells. In these transactions, 57,244 shares were bought while 0 shares were sold. The number of buy transactions has increased to 40 while that of sell transactions has risen to 31 over the past year. The total number of shares bought during that period was 5,720,208 while 158,904,191 shares were sold.

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