Hill-Rom Holdings, Inc.

Hill-Rom Holdings Inc. (HRC - Snapshot Report) reaffirmed 2009 guidance despite the rough economic environment as revenues grew 14.1% in the fourth quarter. HRC surprised on estimates by 7.41% in the fourth quarter. Hill-Rom is trading at 12.8x forward earnings.

Company Description

Hill-Rom manufactures beds and furnishings for hospital patient rooms as well as non-invasive therapeutic products for acute and chronic medical conditions. Founded in 1929, during the Great Depression, the company was a division of Hillenbrand Industries until March 2008 when Hillenbrand spun off the Batesville Casket Company into a free-standing public company with the name Hillenbrand, Inc.

Hillenbrand Industries then renamed itself Hill-Rom Holdings, Inc. Hill-Rom's customers include hospitals, long-term care facilities and home care settings world wide. The company has manufacturing and offices in North and South Carolina, Minnesota, Massachusetts and France.

Fourth-Quarter 2008 Revenue Rises 14.1%

On Nov 10, Hill-Rom reported fourth-quarter 2008 earnings that beat Wall Street estimates by 7.41%. Adjusted earnings per share, which included a $20.5 million, or 20 cents per share, charge for streamlining initiatives, grew 52.6% to 58 cents from the year ago quarter. Analysts expected 54 cents.

Revenue jumped 14.1% to $424.3 million from $372 million in the fourth-quarter 2007. When you account for currency fluctuations, revenue rose 12.9%. All segments saw revenue growth in the quarter.

The North America Post-Acute Care segment was the strongest segment, growing 30% with double digit sales gains in all major product categories.

Europe was also solid, as the International and Surgical segment revenue grew 23%, or 18.2% with currency fluctuations.

The North America Acute Care segment saw revenue climb by 9% as ICU patient support systems and proprietary therapy support system capital and rental products jumped 40% and 30% in the quarter, respectively.

2009 Outlook Reaffirmed

The company believes that 2009 will bring economic challenges. Hill-Rom said it had not yet experienced moderating customer demand but understands the economic environment.

Even with that uncertainty, HRC reaffirmed its prior financial guidance for 2009. Revenue is expected to be in the range of $1.633 to $1.683 billion. Earnings per share is forecast to be between $1.40 to $1.64 per share.

Consensus Estimates for 2009 Rise

With the company's guidance range and solid fourth-quarter, consensus estimates have risen 1 penny to $1.51 per share in the last 30 days.

Value Fundamentals

Hill-Rom is a Zacks #1 Rank (strong buy) stock. It's trading with a forward P/E of 12.79. The company has a price-to-book of 1.14. As an added bonus, HRC pays a dividend with a current yield of 2.10%.