Since March 2021, the S&P 500 has delivered a total return of 70.6%. But one standout stock has more than doubled the market - over the past five years, HCA Healthcare has surged 178% to $533.14 per share. Its momentum hasn’t stopped as it’s also gained 32.2% in the last six months, beating the S&P by 29.9%.

Is it too late to buy HCA? Find out in our full research report, it’s free.

Why Is HCA Healthcare a Good Business?

With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.

1. Economies of Scale Give It Negotiating Leverage with Suppliers

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $75.6 billion in revenue over the past 12 months, HCA Healthcare is one of the most scaled enterprises in healthcare. This is particularly important because hospital chains companies are volume-driven businesses due to their low margins.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

HCA Healthcare’s EPS grew at 21% compounded annual growth rate over the last five years, higher than its 8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

3. Stellar ROIC Showcases Lucrative Growth Opportunities

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

HCA Healthcare’s five-year average ROIC was 28.7%, placing it among the best healthcare companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

Final Judgment

These are just a few reasons why HCA Healthcare ranks highly on our list, and with its shares topping the market in recent months, the stock trades at 17.8× forward P/E (or $533.14 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.

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