On the four Ms, The Ensign Group, Inc. earns 53 for management and 96 for moat. The management score rests on a return on invested capital of 6.9% and a gross margin of 15.8% — figures that describe returns closer to the cost of the capital behind them. Debt sits at 1.86x equity. A wide moat alongside mixed management is a combination worth understanding before the price matters at all.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 15.0% a year, below the 16.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 29.8x. That produces an intrinsic value of $190.40, a 10-CAP price of $80.00 and a payback time price of $126.29, with the value zone set at the highest of the three, $126.29. Today's price of $169.63 is 34% above it.
A wonderful business at the wrong price is still the wrong price. The Ensign Group, Inc. scores well on the business and poorly on the entry point, which is the most common shape in a long bull market.
| Price | $169.63 |
| Market cap | $9.9B |
| P/E ratio | 26.6x |
| Return on invested capital | 6.9% |
| Gross margin | 15.8% |
| Debt to equity | 1.86x |
| Free cash flow yield | 3.7% |
| Growth rate used | 15.0% |
| Growth rate measured | 16.0% |
| Exit multiple assumed | 29.8x |
| Company | Moat | Buy price |
| Henry Schein (HSIC) | 35 | $52.50 |
| Molina Healthcare Inc (MOH) | 39 | $92.07 |
| Align Technology (ALGN) | 51 | $134.51 |
| Universal Health Services (UHS) | 79 | $219.14 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of The Ensign Group, Inc. rather than accepting ours.