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About Joint Corporation
The rise of self-care and an emphasis on the entire human being and all aspects thereof has been on an exponential rise.
From healthcare companies recognizing this sort of trend and adapting to companies in general adjusting their paid leave policies (among other policies), we think humans, knowingly or not, are in a world that is more and more conducive to bettering their entire self.
From the rise of remote (online) synchronous (live) therapy sessions and healthcare services (i.e.,telehealth) to more and more folks taking aspects of their mental and physical health more seriously and being more proactive in these matters, we think a company such as Scottsdale, Arizona-based Joint Corporation stands to benefit from these prevailing trends.
After all, the company primarily focuses its efforts on operating both corporate-owned and franchised chiropractic care centers where one of the company’s team members can help you with practically all things spine-related.
Heck, this is essentially what trained chiropractors have studied and naturally been around the last handful of years, so it only makes sense that whenever you enter into one of the company’s clinics, a spine specialist is just about lurking at each and every corner.
Maybe that’s a bit dramatic.
However, at the end of the day this is a company filled with (hopefully) friendly faces that can help improve your life through your spine.
As displayed on Joint’s website, the company has a variety of plans and packages that, for those who are likely to use the company’s services on an ongoing basis, aren’t terribly expensive, of course, if the quality of service and results that follow are as good as they say they are.
That’s Joint Corporation in a nutshell and this is the formal beginning of our stock analysis article on the company in question.
As a seasoned chiropractor might say, let’s get crackin’.
Joint’s stock financials
First things first, Joint’s share price has seen better days, as is the case that if one were to have purchased stock in the company (NASDAQ: JYNT), say, in early May 2022, today (5/2/2023) you’d be down nearly 50%.
Even though that is the case, we’re more concerned regarding the present but even more so, the future, though we can’t begin to accurately paint a picture without the aid of some present perspective.
The company currently has a market capitalization of $221.65 million, a share price of just above $15, a price-to-earnings (P/E) ratio of an excruciatingly high 187.24, all while not currently issuing an annual dividend to its shareholders.
Given these preliminary financials, we sure hope this company has been growing its year-over-year (YOY) revenues like crazy since its present price-to-earnings ratio is way, way above that of the standard fair value benchmark of 20.
However, as touched on in previous stock analysis articles, if the growth is there it can be well worth paying a premium for shares of the company’s stock.
At the same rate, this isn’t always the case.
Let’s see if it is with Joint Corporation.
According to the company’s balance sheet, Joint’s executives are tasked with tending to approximately $91.9 million in terms of total assets along with around $59.6 million in terms of total liabilities.
Growing rapidly or not, this isn’t a terrible balance sheet structure, all things considered, as a large chunk of the company’s total liabilities is probably composed of long-term liabilities that will eventually perhaps turn into assets, such as chiropractic equipment but even more so, real estate.
Even if this isn’t necessarily the case, the company’s total assets outweigh the amount of its total liabilities by a fine margin at this stage, from our perspective.
As it pertains to the company’s income statement, this company’s growth has been nothing but fantastic thus far, at least over the last five year’s span of time.
Specifically, the company’s total revenue in 2018 stood at around $36.6 million and has since climbed each year to its latest reported figure (on TD Ameritrade’s platform) of just south of $102 million, which can likely be attributed to a mixture of the company opening more and more locations around the United States as well as the price hikes this company likely initiated as a result of inflationary and supply chain-related pressures imposed on the business and businesses alike.
Either way, this is excellent growth over a relatively short span of time.
What’s even more impressive to us is the fact that even while growing at a bountiful rate, the company has been able to produce positive net income and total cash from operations figures (according to the cash flow statement) over the same time period, which was littered with supply chain challenges, inflationary issues, COVID-19-related concerns and other headwinds that could’ve kept this company down and out.
Through these numbers Joint has clearly displayed some strong economic resilience.
Joint’s stock fundamentals
On the trailing twelve month (TTM) net profitability spectrum, Joint’s isn’t all that impressive, but neither is the industry’s average.
For instance, according to TD Ameritrade’s platform, the company’s TTM net profit margin sits in at 1.16% to the industry’s average of 3.24%.
Sure, we’re fairly happy to find that the company is net profitable on a TTM basis, however, given that the industry’s average is just a little over 3%, the annualized net profit margin ceiling seems rather discouraging.
Of course this company isn’t capped to the industry’s average, however, it is still an indication of what is likely to be the grand TTM net profit margin prize as Joint continues to grow and mature as a company.
Eh.
The same can be said regarding the company’s and the industry’s TTM returns on assets and investment(s), as they are both respectively low and Joint’s, again, slightly trail the industry’s averages.
Eh, once again.
Should you buy Joint Corporation stock?
This company’s revenues are growing like hotcakes and its positivity with respect to its net income and total cash from operations are encouraging, not to mention that its balance sheet is in a good place, but none of these simply warrant paying over 200 times earnings for a bite of the company today, from our vantage point.
If the company’s price-to-earnings ratio stood at 30 or 40, we might develop a different opinion and take a second look, however, this company’s valuation is still just a little too rich for our blood at the moment.
We give Joint Corporation’s stock a “sell” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.