Hill-Rom Holdings, Inc.

Hill-Rom Holdings, Inc. (HRC - Snapshot Report) just hit a new all-time high above $41 after reporting strong Q4 results that included a 22% earnings surprise. With estimates on the rise and a bullish growth projection, this Zacks #1 rank stock is lying in a warm bed of momentum.

We got an update on Hill-Rom's business in late October when the company reported strong Q4 results that easily beat expectations.

Third-Quarter Results

Revenue for the period was up 9% from last year to $397 million. Earnings also came in strong at 67 cents, 22% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 24% over the last four quarters.

Hill-Rom's largest segment, North American Acute Care, saw sales increase 10% from last year to $231 million. The company's International and Surgical division was also strong, up 14% from last year to $118 million.

Hill-Rom also scored big in a few key categories, with its operating margin expanding to 16.4% from 10.7% last year and operating cash flow increasing to $79 million.

Strong Balance Sheet

The company emerged from the quarter with its strong balance sheet in tact, with cash and equivalents of $184.5 million against total debt of $152 million, down $50 million from last year. Estimates

We saw some pretty solid movement in estimates on the good quarter, with the current year adding 21 cents to $2.13 and the next-year estimate gaining 21 cents to $2.39, a bullish 12% growth projection.

Valuation

But in spite of the gains, the valuation picture still looks reasonable at 18X forward earnings, in line with the industry average of 19X.

2-Year Chart

HRC recently hit a new all-time high after jumping on the good quarter. But in spite of the gains, the stochastic below the chart is signaling that shares are trading well away from over-bought territory. Look for support from the long-term trend on any weakness, take a look below.

Read the Aug 18 HRC article here

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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.