ACHC

We rate Acadia Healthcare Company, Inc. (ACHC) as a Reduce with a composite score of 40.9/100 at a current price of $17.00. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (61th percentile) and stability (47th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (32th percentile) and investment (35th percentile) tempers our overall conviction. We assign a No Moat rating (25/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Acadia Healthcare Company, Inc. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 40.9/100 places it at rank #3435 in our full 7,333-stock universe. At $2.3B in market capitalization, Acadia Healthcare Company, Inc. is a mid-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 7%, though momentum at the 32th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 46% (-13.6pp vs sector) narrow to operating margins of 6% (+2.6pp vs sector) and net margins of 4.7%, yielding a gross-to-net conversion rate of 10%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $17.00, Acadia Healthcare Company, Inc. is trading near fair value based on current fundamentals. Our value factor score of 61/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 9.7x (a 59% discount to the sector median of 23.7x), EV/EBITDA of 10.0x (near the sector median), P/B of 0.5x, P/S of 0.5x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to Acadia Healthcare Company, Inc.. The stock presents a balanced risk profile: low beta of 0.65 — while defensive, this may indicate limited upside participation in bull markets and the combination of leverage (74% D/E) and thin margins (4.7% net) amplifies downside risk. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: low beta of 0.65 — while defensive, this may indicate limited upside participation in bull markets; the combination of leverage (74% D/E) and thin margins (4.7% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 47th percentile and quality factor at the 38th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 46% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Acadia Healthcare Company, Inc.'s capital allocation as Poor. Key concerns include suboptimal returns on capital. Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Acadia Healthcare Company, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Acadia Healthcare Company, Inc. receives a Reduce rating with a composite score of 40.9/100 (rank #3435 of 7,333). Our quantitative framework assigns a No Moat (25/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 42/100.

Our analysis does not support a constructive view on Acadia Healthcare Company, Inc. at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.