Over the past six months, Alignment Healthcare has been a great trade, beating the S&P 500 by 11.5%. Its stock price has climbed to $13.61, representing a healthy 16.3% increase. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Following the strength, is ALHC a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Are We Positive On ALHC?
Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ: ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination.
1. Customer Base Skyrockets, Fueling Growth Opportunities
Revenue growth can be broken down into the number of customers and the average spend per customer. Both are important because an increasing customer base leads to more upselling opportunities while the revenue per customer shows how successful a company was in executing its upselling strategy.
Alignment Healthcare’s total customers punched in at 217,500 in the latest quarter, and over the last two years, their count averaged 38.8% year-on-year growth. This performance was fantastic, reflecting its ability to "land" new contracts and potentially "expand" them later - a powerful one-two punch for sales. 
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Alignment Healthcare’s revenue to rise by 34.7%. While this projection is below its 40.2% annualized growth rate for the past two years, it is eye-popping and implies the market is forecasting success for its products and services.
3. EPS Improving Significantly
Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Although Alignment Healthcare’s full-year earnings are still negative, it reduced its losses and improved its EPS by 28.3% annually over the last three years. The next few quarters will be critical for assessing its long-term profitability. An inflection point could be coming soon.
Final Judgment
These are just a few reasons Alignment Healthcare is a rock-solid business worth owning, and with its shares outperforming the market lately, the stock trades at 47.3× forward EV-to-EBITDA (or $13.61 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More Than Alignment Healthcare
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
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