Skilled Healthcare Group, Inc.

Skilled Healthcare Group, Inc. (SKH - Snapshot Report) is growing its nursing and assisted living network even during a tough environment. Analysts forecast earnings growth of 14.30% over the next 5 years. SKH is cheap. The company trades at only 8.2x forward earnings.

Company Description

Skilled Healthcare Group operates nursing and assisted living facilities, rehabilitation therapy and provides hospice care. Together, the company operates 10,100 licensed beds which are located in California, Texas, Kansas, Missouri, New Mexico and Nevada. The facilities are usually clustered in large urban or suburban markets.

The rehabilitation and hospice segments are distinct businesses. Hallmark Rehabilitation employs 1000 therapists and contracts with skilled nursing facilities as part of an integrated service.

Third Quarter Revenue Jumped 13%

On Nov 6, Skilled Healthcare reported third-quarter earnings that surprised on Wall Street estimates by 4.00%, or 1 cent per share. Net income rose 39.1% to $9.6 million, or 26 cents per share, from $6.9 million, or 19 cents per share, in the year ago period. Analysts expected 25 cents.

Revenue climbed 13% to $182.5 million from $161.5 million in the third quarter of 2007. The largest segment, long-term care at nursing and assisted living facilities, saw revenue rise 13.1% to $159.7 million. In September 2008, the company also acquired 7 assisted living facilities in Kansas which it expects to be marginally accretive to earnings in 2008.

2008 Guidance

The company maintained its 2008 full year guidance of earnings per share in the range of 98 cents to $1.03 per share. Revenue is projected between $730 million and $740 million.

2008 consensus estimates have risen 1 cent to 99 cents in the last week. Analysts project 5-year earnings growth of 14.30%.

Value Fundamentals

Skilled Healthcare Group is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 8.13. It has a price-to-book of 0.81.

SKH is scheduled to report fourth-quarter and 2008 full year earnings on Feb 10.