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Momentum

Michael Vodicka

Hill-Rom Holdings, Inc.

HRC

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Hill-Rom Holdings, Inc. (HRC - Snapshot Report) remains glued to its recent 52-week high after reporting another strong quarter in late April. With estimates on the upswing and a bullish growth projection, this Zacks #1 rank stock doesn't rest for momentum.

Company Description

Hill-Rom Holdings, Inc. provides medical technologies with a specialty in beds for the healthcare industry worldwide. The company was founded in 1969 and has a market cap of $2.9 billion.

HRC had been looking a bit weak early in the year before shares began recovering and heading higher in early March. The reversal came directly ahead of the company's strong Q1 results from late April that came in ahead of expectations.

First-Quarter Results

Revenue for the period was up 13% from last year to $402 million. Earnings also came in strong at 54 cents, 8% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 24% over the last four quarters.

The good quarter was driven by the company's largest segment, with North American Acute Care increasing 15% to $251 million. International sales, excluding Canada, were also strong, increasing 12% to $99 million.

Financial Profile

Hill-Rom has used its recent earnings momentum to strengthen its balance sheet, with cash and short-term investments up $74 million from last year to $235 million against total debt $154 million, mostly in line with last year.

Estimates

We saw some decent movement in estimates off the good quarter, with the current year adding 9 cents to $2.33 and the next-year estimate gaining 12 cents to $2.64, a bullish 13.5% growth projection.

Valuation

But in spite of the recent gains, the valuation picture still looks solid, with HRC's forward P/E of 20X a discount to its peer average of 21X.

12-Month Chart

On the chart, HRC has been trading strong since early March, recently hitting a new all-time high on the good quarter and higher guidance. Look for support from the long-term trend on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.

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