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Triple-S Management Corporation (NYSE:GTS) may be subject to some uncertainty surrounding the healthcare industry, but the stock continues to trade well below its intrinsic and historical valuations. The largest managed care company in Puerto Rico offers a broad array of managed care and related services to commercial, governmental and individual clients.

The healthcare industry has been trading at a discount due to uncertainty surrounding President Obama’s plans for reform, which up until recently included a government healthcare plan. The objective of these plans is to encourage more competition within the sector, which could lead to more competitive pricing and lower margins for providers.

A Look at the Second Quarter

Last quarter, Triple-S reported net income that jumped 53.7% to $18.66 million, or $0.63 per share, on revenues that increased 13.6% to $495.63 million.

Meanwhile, the company’s balance sheet also remains robust with $42.69 million in cash and equivalents, and a healthy quick ratio of 1.44 that suggests it is not in any immediate financial danger.

Cash flows from operating activities increased by $74.3 million for the six months ended June 30, 2009, primarily due to the effect of increase in premiums collected amounting to $149.8 million, offset in part by increases claims paid and cash paid to suppliers and employees.

The increase in premiums was attributed to higher member months enrollment.

A Strong Value by Many Measures

Recently, Tripe-S now expects earnings per share to be in the $2.03-2.13 range, which is $0.10 above its prior guidance, reflecting the accretion from the acquisition of La Cruz Azul.

This represents an 81.2-90.1% increase over last year’s results, and equates to a forward price-earnings multiple of just 8.3-8.7x earnings based on a share price of $17.72 a piece.

Currently, Triple-S operates in an industry that trades at a multiple of around 12.15x earnings, suggesting a share price of around $24.66-25.87 a piece based on projections for 2009. Meanwhile, the company’s price-earnings to growth ratio paints an even more bullish picture by suggesting a multiple closer to 15-20x earnings based on projected growth.

In the end, Triple-S remains a somewhat risky play given the uncertainties surrounding the industry. However, the stock continues to trade at a low valuation relative to its peers and growth rates.

As a result, this is one stock that investors should watch closely over the coming months.

Disclosure: Author owns no shares in companies mentioned.

Source: Triple-S Management: Undervalued Healthcare Stock