agilon Health (AGL) Stock Looks Undervalued On Sales But Rich After A 7x Run
After a very strong year to date move, agilon health now looks like a stock where price momentum and a supportive valuation score are pulling in the same direction. This raises the question of how much of the recent enthusiasm is already reflected in the share price.
- Year to date, agilon health has returned a very large 671%, which puts recent price action front and center in any valuation discussion.
- Recent news that its REACH Accountable Care Organizations generated US$229m in gross savings with high quality scores can support expectations around the sustainability of its value based care model, while the history of deep multi year share price declines highlights execution and durability of returns as key risks.
- On Simply Wall St's broader checks, agilon health screens as relatively cheap, with the company looking undervalued in 5 of 6 valuation tests.
The issue now is whether agilon health's current price still leaves enough room for a margin of safety after such a sharp year to date move.
Is agilon health Still Cheap on Sales?
P/S is a useful lens for agilon health because the company is still building towards consistent free cash flow and earnings, so investors often focus on what they are paying for each dollar of revenue.
On this measure, agilon health trades on a P/S of about 0.4x, which is well below the Healthcare industry average of 1.4x and also below the peer group average of 2.3x. The Fair Ratio model, which looks at factors such as growth potential, margins, size and risk, points to a P/S of around 0.5x as a more typical level for this stock, so the current multiple sits below that reference point.
Despite the strong reaction to agilon health’s recent REACH ACO savings announcement, the market is still pricing its revenue at a discount to sector and peer benchmarks.
Overall, agilon health appears undervalued on its P/S multiple, with the share price implying a lower revenue valuation than both the Fair Ratio model and the broader Healthcare industry.
See what the numbers say about this price — find out in our valuation breakdown.
The agilon health Narrative: What Would Justify Today's Price?
Simply Wall St Narratives for agilon health pick up where the valuation puzzle leaves off by laying out which paths for growth, margins and earnings would need to play out for the stock to be worth significantly more or less than it is today, based on community scenarios. Where a single ratio or model gives you one outcome, these frameworks unpack the future that number relies on so you can monitor whether agilon health's story is tracking toward it or away from it.
One of the top community narratives on agilon health: 8% overvalued
"Analysts have lifted their price target for agilon health from $95.00 to $120.00, citing updated assumptions around revenue growth, profit margins, fair value and future P/E that support a higher assessed valuation..."
Read one of the top narratives on agilon health
Do you think there's more to the story for agilon health? Head over to our Community to see what others are saying!
The Bottom Line
For agilon health, the key takeaway is that the stock still screens as undervalued on market multiples, even after a very strong year to date move. The current discount to peers suggests the market is cautious about execution and the durability of returns, not giving full credit for the value based care model. The real question from here is whether agilon health can deliver consistent performance that convinces investors this discount reflects opportunity rather than a value trap.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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