Amedisys Inc.

Amedisys Inc. (AMED - Snapshot Report) is finding big profits in the home health care arena as the company recently provided a bullish 2009 earnings outlook. In Oct 2008, the company surprised on third quarter estimates by 8.54%. AMED is cheap but also has a solid growth story. Its PEG is only 0.48.

Company Description

Amedisys provides home health care and hospice care in the United States and Puerto Rico.

Bullish about 2008

Despite weakening economic conditions across numerous industries, on Nov 20, Amedisys reaffirmed its previous 2008 earnings per share guidance in the range of $3.20 to $3.25 per share. Revenue is still expected to be between $1.15 billion and $1.175 billion.

In response to the reaffirming, covering analysts raised estimates to $3.23 from $3.21 in the last 60 days, or right in the middle of the forecast range.

Amedisys is scheduled to report fourth-quarter and full year 2008 earnings on Feb 17.

2009 Guidance Optimistic

On Jan 6, the company provided its first forecast for 2009. EPS is expected in the range of $4.10 to $4.30 per share. Revenue is projected between $1.425 billion and $1.475 billion.

"Our 2009 guidance is driven by expected improvements in contributions from past acquisitions, our efficiency initiatives and organic revenue growth, including further contributions from our Specialty Division," said William F. Borne, Chairman and CEO.

"We will continue to pursue our strategy of growing revenue through organic revenue growth, startups and acquisitions while providing efficient high quality health care," he said.

Given the guidance, consensus estimates jumped 7.5% to $4.15 per share in the last 60 days with 9 out of 14 covering analysts raising estimates. Analysts expect 28.39% year over year earnings growth.

Record Third Quarter Revenue

Amedisys provided its 2008 and 2009 guidance coming off of a record third quarter in revenue and net income. On Oct 28, the company reported that service revenue jumped 77.7% to $321.6 million from $180.9 million in the same quarter of 2007.

Net income rose 16.2% to $23.5 million from $20.2 million in the year ago period. Earnings per share climbed 13% to 87 cents from 77 cents per share in 2007. Analysts expected 82 cents.

Value Fundamentals

Amedisys is a Zacks #1 Rank (strong buy) stock. The company has surprised on estimates 4 quarters in a row by an average of 8.52%.

AMED is trading at 9.4x forward earnings. It has a price-to-book of 2.18. The company also has a stellar 1-year return on equity (ROE) of 16.03%.