MD

We rate Pediatrix Medical Group, Inc. (MD) as a Hold with a composite score of 61.2/100 at a current price of $20.06. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (74th percentile) and value (68th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (32th percentile) and stability (63th percentile) tempers our overall conviction. We assign a Narrow Moat rating (67/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. 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.

Pediatrix Medical Group, 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 61.2/100 places it at rank #583 in our full 7,333-stock universe. At $1.5B in market capitalization, Pediatrix Medical Group, Inc. is a small-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (74th percentile), revenue contraction of -2% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 100% (+40.4pp vs sector) narrow to operating margins of 10% (+6.5pp vs sector) and net margins of 7.8%, yielding a gross-to-net conversion rate of 8%. 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 $20.06, Pediatrix Medical Group, Inc. is trading near fair value based on current fundamentals. Our value factor score of 68/100 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 10.7x (a 55% discount to the sector median of 23.7x), EV/EBITDA of 8.3x (discounted to peers), P/B of 1.9x, P/S of 0.8x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to Pediatrix Medical Group, Inc.. The stock presents a balanced risk profile: significant leverage (159% debt-to-equity). 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: significant leverage (159% debt-to-equity). 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 66th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 100% 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 Pediatrix Medical Group, Inc.'s capital allocation as Poor. Key concerns include elevated leverage (159% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Pediatrix Medical Group, 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, Pediatrix Medical Group, Inc. receives a Hold rating with a composite score of 61.2/100 (rank #583 of 7,333). Our quantitative framework assigns a Narrow Moat (67/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 60/100.

Our analysis supports a neutral stance on Pediatrix Medical Group, Inc.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.