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Hill-Rom Holdings, Inc. (HRC - Analyst Report) recently surged to a new all-time high at $35.89 after reporting an impressive 45% earnings surprise in late July. The solid quarter pushed estimates higher, with the current year adding 25 cents to $1.64.

Company Description

Hill-Rom Holdings, Inc. provides medical technologies and services primarily related to beds for the healthcare industry worldwide. The company was founded in 1969 and has a market cap of $2.14 billion.

With healthcare demand continuing to grow on the back of an aging domestic population, Hill-Rom was able to deliver exceptional Q2 results on July 28 that handily beat expectations.

Second-Quarter Results

Revenue for the period was up 8% from last year to $361 million. Earnings also came in strong at 45 cents, 45% ahead of the Zacks Consensus Estimate, pushing the company's average earnings surprise over the last four quarters to 28%.

Hill-Rom's strong performance was driven by its North American Acute Care division, where sales were up 8% to $205 million.

Although the company's International and Surgical division produces a smaller portion of its revenue, sales in the group were up 15% from last year in constant currency to $11 million on strength out of Europe, the Middle East and Asia.

Margin Expansion

Hill Rom was able to compliment its solid top-line growth by boosting its margins, with gross margin up 440 basis points from last year to 49.4%. Its adjusted operating margin came in at 13.2%, up from 7.4% last year.

Balance Sheet

Hill Rom continues to remain focused on strengthening its balance sheet, with cash and equivalents up $68 million from last year to $196 million. Its debt is shrinking too, down $44 million from last year to $154 million.

Estimates

Estimates took a really nice jump on the good quarter, with the current year up 24 cents to $1.63. The next-year estimate added 21 cents to $1.84, a solid 12% growth projection.

Valuation

The valuation picture looks really solid here too, with a forward P/E of 20.5X against its peers 19X.

2-Year Chart

HRC took a big jump higher on the good quarter, hitting a new all-time high at $35.89. Look for support from the trend line on any weakness, take a look below.

HRC: Hill-Rom Inc. >
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.