Computer Programs & Systems

Computer Programs & Systems, Inc. (CPSI) closed just $1 below a 52-week high on Tuesday. Shares have been soaring as analysts hike earnings estimates. Wall Street sees earnings growth of 12% in 2009 and 15% in 2010.

Company Description

Computer Programs & Systems, Inc. provides healthcare information solutions for community hospitals with over 650 client hospitals in 46 states. The company was founded in 1979, and is a single-source vendor providing comprehensive software and hardware products as well as complete installation services and extensive support. CPSI’s fully integrated, enterprise-wide system automates clinical and financial data management in each of the primary functional areas of a hospital.

The company’s 700 technical, healthcare and medical professionals provide system implementation and continuing support services as part of a comprehensive program designed to respond to clients’ information needs in a constantly changing healthcare environment.

Higher Estimates

Analysts hiked earnings estimates on the strong quarterly results. Full-year 2009 earnings forecasts of $1.61 per share were increased from $1.59 over the past month.

Wall Street sees 12% earnings growth for the current year and 15% for the following year.

Strong Fundamentals

Some of the stellar fundamentals that make CPSI a great Growth and Income pick include the company’s return on equity (ROE) of 40%, which soars past the industry average of 9%. It has a solid balance sheet with no debt. The company’s net profit margin of 13% also tops the industry average of 5%.

Taking Care of Business and Shareholders

Computer Programs & Systems recently posted fourth-quarter results. Total revenues came in at $32.0 million, a 14% increase from the previous year's $28.1 million.

Fourth-quarter net income totaled $4.8 million, 26.7% above last year's $3.8 million. These results translate into earnings per share 45 cents for the quarter, versus the year-prior 36 cents.

For the year, total revenues jumped 8.8% to $119.7 million from the previous year’s $110.0 million.

Full-year net income increased 19.5% year-over-year to $15.4 million, or $1.43 per share, compared with $12.9 million, or $1.20 per share.

Chief Executive Officer and President Boyd Douglas said, “By any measurement, 2008 was a very good year for our company. Although pleased with our success, we recognize that we operate in a challenging economic environment, and while we look to the future with optimism, we know that this is no time for overconfidence. Our strategy is to stick to what we know best,” adding that the company will continue providing exceptional products and services to clients and work even harder to counter the prevailing economic winds.

Management noted that CPSI has been in business for almost three decades and has proven that it can continue fulfilling and exceeding the expectations of its customers shareholders, regardless of national economic cycles.

The company also declared a quarterly cash dividend of 36 cents per share, which was paid out on February 26.

CPSI is taking care of shareholders with a dividend yield of 4.8%, which is high above the industry average as most of the company’s peers pay no dividend.

Read the full analyst report on CPSI