Sun Healthcare Group, Inc.

Sun Healthcare Group, Inc. (SUNH) reported another solid quarter in early August in which its income was up big from last year. Analysts have revised their estimates upward within the last 30 days, and shares have rallied accordingly, recently hitting a new 26-week high.

Sun Healthcare Group, Inc., through its subsidiaries, provides long-term, sub-acute specialty healthcare services to seniors in the United States. The company was founded in 1989, has a market cap. of $744 million and is headquartered in Irvine, California.

Industry Trend

As a large portion of our nations's population ages and transition into their golden years, it has triggered strong demand for healthcare services. This has enabled company's like Sun Healthcare to drives sales and grow profits. This dynamic was evident when the company reported strong second-quarter results on august 6.

Second-Quarter Results

Revenue was up 5.6% from last year to $454.2 million. Net income spiked to $11.2 million, up 44% from last year's $7.7 million. This produced earnings of 25 cents per share, one penny ahead of analyst estimates of 24 cents per share.

Consistent Earnings

Sun Healthcare has been able to produce consistent earnings in a challenging environment, a testament to strong demand and operational efficiencies. Over the last four quarters, the company has surprised and beaten analyst estimates by an average of 1 penny, or 7.45%.

Analyst Estimates

After the solid quarter, analysts boosted their earnings projections. The current-year estimate now stands at 92 cents per share, up from 89 cents per share 30 days ago. The next-year estimate is bullish, projecting earnings growth of 23%, with the consensus estimate pegged at $1.13 per share.

Valuations

Based upon the current-year estimate, this stock has a forward P/E multiple of 18.5X, a premium to the overall market.

The Chart

Shares of SUNH have been rallying since the company reported its excellent quarterly results, advancing from just above $14 a high-water mark over $17 on Aug 11. Since then, this stock has traded mostly sideways, until recently pressing against an up trend and once again heading back to the high. Take a look at the chart below.

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