Business Strategies 2 What are the stock prices for the last 5 years of Acadia Healthcare. Return on Equity might help you understand their debt but

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What are the stock prices for the last 5 years of Acadia Healthcare. Return on Equity might help you understand their debt but are prices rising? Falling? Are they buying back stock? Their debt ratios are not as bad some going through a pandemic.

Introduction

Acadia Healthcare is an American healthcare provider which currently has 225 facilities that operate in America and Puerto Rico. The company operates in 40 states and has over 20,000 employees with a bed capacity of over 10,200 beds which means that it is able to attend to the needs of many patients at a go. This assignment focuses on the stock prices of Acadia healthcare for the last five years. According to financial analysts the company stock is considered a buy and this means that investors that invest in the company’s stock are likely to get returns from the purchase.

Stock prices

The following chart shows the performance of the company’s stock over the last four years.

The stock price in 2018 was $33.11 which then decreased by 21% all the way to $26.14. The decrease in the stock price is an indicator that the supply of the stock increased and more people were willing to sell the stock compared to the number of people that wanted to buy the stock. The company’s stock then increased in the year 2019. The increase for the stock price in the year was 26.6% increase since the company stock price moved from $26.14 to $33.09. The increase in the price of the stock was an indicator that the company stock’s demand increased and more investors were willing to buy the stock.

From 2020 the price of the company stock has been increasing all the way to 2022 and this improvement over these years can be explained by the company health. The financial health of the company improved and with more stable earnings being realized by the company, investors were convinced that purchasing stocks from the company would give them a higher return and hence it was considered a buy (Brusov et al., 2018). The stock price of the company increased from $33.09 in 2020 to $52.01 in 2021. This was the largest increase to be realized over the five years; the percentage increase in the stock price was 57.18%. 2020 and 2021 were the years that where most of the companies were affected by the pandemic negatively. However, for the healthcare company the profits increased as more people demanded healthcare services. The value of the stock also increased in Jan 2022 compared to January 2021.

Looking at the return on equity of the organization, the return has been increasing over the last five years and this has also contributed in the increase of the stock price. The high and increasing ROE in the company is an indicator that the company efficiently uses its finances earned from the shareholders equity for the growth of the company and the increase in the income of the firm (Vernimmen et al., 2022). The high ROE of the company has been attracting more investors and this explains the increase in the stock price (Brusov et al., 2018). As earlier indicated, the stock price increases when the demand for a stock increase. The confidence that investors has been having for the company has increased and hence more people are encouraged to buy more shares. This is a good indicator has the company has more capital at its disposal which can be used in the growth and expansion of the organization.

The question of whether the stock prices are rising of falling can be answered in various ways. Looking at the stock prices for the last five years we can see that the prices decreased in 2019 from 2018 after which the stock prices have been increasing. Looking at the prices of the stock of Acadia Healthcare Company Inc. for the last one month, the stock prices have been fluctuating where they have been both rising and falling (Vernimmen et al., 2022). The lowest stock price of the company in the month of February 2022, was at $50.61 while the highest stock price recorded for the month was $56.92. From the analysis of the stock in this one month we can say that it is not very volatile; this means that the stock is a buy as the investors will make a return if they have the stock.

Looking at the stock prices there are times when the stocks have gone down but that is not a cause of alarm since even the largest organizations have their stock prices fall sometimes. The important factor that the potential investors should look at is the fundamental financial metrics of the organization (Shah et al., 2019). First, the debt ratios of the company are at a good level despite the pandemic. The company has not been taking so much debt and this is good for the company because of the financial leverage. The larger part of the company is financed by equity as opposed to debt which means that the financial leverage of the company is not at risk. The company has been making good revenue and this means that they are able to pay their investors dividends.

Conclusion

The stock prices of the company show the price at which the shares of the company are trading for in the market. Acadia healthcare’s stock price has been increasing in the last four years which is a good indicator. The stock’s price trend over the last five years makes it a buy stock and investors are advised to buy more of the stock has it promises good returns.

References

Brusov, P., Filatova, T., Orekhova, N., & Eskindarov, M. (2018). Modern corporate finance,

investments, taxation and ratings. Springer International Publishing.

Shah, D., Isah, H., & Zulkernine, F. (2019). Stock market analysis: A review and taxonomy

of prediction techniques. International Journal of Financial Studies7(2), 26.

Vernimmen, P., Quiry, P., & Le Fur, Y. (2022). Corporate finance: theory and practice. John

Wiley & Sons.

Acadia Healthcare stock price 2018-2022

2018 2019 2020 2021 2022 33.11 26.14 33.090000000000003 52.01 57.03

Price in dollars

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