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AMN Healthcare Services

AHS

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Shares of AMN Healthcare Services, Inc. (AHS - Snapshot Report) reached a new 52-week high of $7.87 on August 21, and have shot up 35.5% since posting solid second-quarter 2012 results earlier this month. Earnings per share in the quarter soared 266.7% year over year, marking a 57.1% positive earnings surprise.

This healthcare staffing and clinical workforce management solutions provider has outperformed the Zacks Consensus Estimate in 4 out of the last 6 quarters, and delivered in-line results in the other two. The stock now holds a Zacks #1 Rank (Strong Buy) and has surged 80.3% year-to-date, demonstrating its inherent strength and long-term earnings growth projection of 14%.

Fabulous 2Q, Upbeat Guidance

AMN Healthcare Services declared impressive second-quarter results on August 2, wherein earnings of 11 cents per share surpassed the Zacks Consensus Estimate of 7 cents and increased substantially from 3 cents in the prior-year quarter.

The quarter’s earnings were aided by improving demand and constructive implementation of strategy in its core staffing and recruitment services and workforce solutions. Looking at the earnings surprise trend over the last six quarters, AMN Healthcare Services has topped estimates by an average of 133.1%.

Consolidated sales of $235.8 million comfortably surpassed the Zacks Consensus Estimate of $231 million, and rose 7% year over year. The company experienced sales increases across the Nurse and Allied Healthcare Staffing (up 13%) and Physician Permanent Placement Services segments (up 1%), partly mitigated by a sales decline at Locum Tenens Staffing segment (down 5%). Gross profit jumped 11% to $67 million, whereas gross margin expanded 110 basis points to 28.4%.

Management now expects third quarter consolidated sales between $236 million and $240 million, reflecting a year-over-year growth of 3% to 5%. Gross margin is projected at 28% to 28.5%.

Earnings Momentum Climbing

The Zacks Consensus Estimate for 2012 rose 11.4% to 39 cents per share in the past 30 days, thanks to upward revisions in all 6 estimates. The current estimate implies year-over-year growth of 178.6%.

For 2013, four of 6 estimates were revised higher over the same timeframe, lifting the Zacks Consensus Estimate by 4.3% to 49 cents per share. The current estimate suggests year-over-year growth of 26.5%.

Premium Valuation

AMN Healthcare Services currently trades at a forward P/E of 19.46x, reflecting a 5.4% premium to the peer group average of 18.47x. Also, on a price-to-book basis, shares trade at 2.18x, a 1.9% premium to the peer group average of 2.14x. However, on a price-to-sales basis, the stock trades at 0.33x, indicating a discount of 48.4% to the peer group average of 0.64x.

A Look at the Chart

The chart below indicates that after witnessing volatility in the past, the stock price has now started to correlate with the increasing trend seen in estimates. The year-to-date return for the stock is 80.3% compared to the S&P 500’s return of 10.7%.

Founded in 1985 and headquartered in San Diego, California, AMN Healthcare Services offers healthcare recruitment and clinical staff management solutions in the U. S., and operates under three segments – Nurse and Allied Healthcare Staffing, Locum Tenens Staffing and Physician Permanent Placement Services. The company provides staffing solutions for hospitals and other healthcare institutions, provides physicians on a temporary and permanent basis, and offers a recruitment process outsourcing program. The company has a market cap of $309.9 million, and competes with Cross Country Healthcare, Inc. (CCRN) and On Assignment Inc. (ASGN).

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