ARDT

Ardent Health Partners, 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 44.6/100 places it at rank #2878 in our full 7,333-stock universe. At $1.9B in market capitalization, Ardent Health Partners, Inc. is a small-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 29th 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 57% (-2.6pp vs sector) narrow to operating margins of 4% (+0.5pp vs sector) and net margins of 3.3%, yielding a gross-to-net conversion rate of 6%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

We assign Ardent Health Partners, Inc. a Narrow Moat rating with a composite moat score of 42/100. The ROIC-WACC spread of -7.5% is the primary signal of economic value creation. The company possesses identifiable competitive advantages, though they are less entrenched than those of wide-moat peers. Our analysis indicates that Ardent Health Partners, Inc. can sustain above-average returns on invested capital for at least 10 years, with the strongest contributor being growth durability at 10.5/20.

The strongest moat sources are growth durability (10.5/20) and reinvestment efficiency (10/20). Rev growth 7%, 2yr history. Capital turnover 3.06x. These pillars form the core of Ardent Health Partners, Inc.'s competitive identity and are the primary drivers of excess returns in our framework.

Areas of relative weakness include economic value creation (4.2/20) and financial resilience (7.1/20). ROIC -0.3% vs WACC 7.1% (spread -7.5%). Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.

Our moat trend assessment is Stable. Multi-year ROIC and operating margin trajectories show neither meaningful improvement nor deterioration, suggesting the competitive position is steady. We expect Ardent Health Partners, Inc.'s moat profile to remain largely unchanged absent a material shift in return on capital or industry dynamics.

At a current price of $9.62, Ardent Health Partners, Inc. is trading at a premium to fundamental value. Our value factor score of 39/100 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. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 6.7x (a 72% discount to the sector median of 23.7x), EV/EBITDA of 9.8x (near the sector median), P/B of 0.8x, P/S of 0.2x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

Key profit drivers include gross margins of 57% providing a solid profitability foundation, moderate revenue growth of 7%. The margin cascade from 57% gross to 4% operating to 3.3% net reveals the company's cost structure and reinvestment intensity. Our analysis indicates that profit quality is adequate though not exceptional, with the quality factor at the 50th percentile.

The margin profile shows gross margins of 57%, operating margins of 4%, net margins of 3.3%. Return metrics include ROE of 12.4% and ROA of 3.9%. Relative to the Services sector, gross margins are 2.6 percentage points below the sector median of 60%, and ROE of 12.4% compares to a sector median of 5.3%.

The balance sheet reflects moderate leverage with D/E of 69%, revenue growth of 7%. The sector median D/E is 0%, putting Ardent Health Partners, Inc. at higher leverage than the typical peer. Overall balance sheet health is adequate for the current business environment.

We assign a Medium uncertainty rating to Ardent Health Partners, Inc.. The stock presents a balanced risk profile: the combination of leverage (69% D/E) and thin margins (3.3% 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: the combination of leverage (69% D/E) and thin margins (3.3% 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 63th percentile and quality factor at the 50th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 57% provide a buffer against cost pressures; above-average stability (63th percentile) suggests predictable business dynamics. 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 Ardent Health Partners, Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 12.4%, and the balance sheet is managed within acceptable parameters (D/E: 69%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Ardent Health Partners, Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Ardent Health Partners, Inc. receives a Reduce rating with a composite score of 44.6/100 (rank #2878 of 7,333). Our quantitative framework assigns a Narrow Moat (42/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 44/100.

Our analysis does not support a constructive view on Ardent Health Partners, Inc. at this time. The combination of the current quantitative profile, medium uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.