AVAH

Aveanna has crossed an operating inflection that the price hasn't fully credited. Revenue grew 20.2% to $2.43B (FY2026) with operating income up 83.5% to $256M and operating margin expanding to 10.5% from the mid-single digits implied by the FY2021-FY2024 loss years. Operating cash flow nearly quadrupled (+285.6%) to $126M, and the four-year revenue history ($1.50B→$2.43B) shows durable, partly acquisition-driven growth in a structurally favorable setting — care delivered in the home, the lower-cost site CMS and payers prefer. At $8.66 the stock trades at 0.8x sales and an estimated ~11-12x EV/operating income (market cap $1.88B plus $1.29B long-term debt less $193M cash), undemanding for a business whose margins are still climbing.

The headline 8.2x P/E and $1.05 EPS overstate run-rate earnings and should be discounted: net income leapt 2159% to $225M while operating income rose only 83.5%, so most of the bottom-line jump sits below the operating line (consistent with a deferred-tax/valuation-allowance benefit — retained earnings remain deeply negative at -$1.16B). The reported 115.7% ROE is likewise an artifact of a razor-thin $194M equity base, not franchise economics. Judge this on operating income and cash flow, where the improvement is genuine, not on the tax-inflated net figure.