CHEMED CORP CHE

Mar 06, 2007

Chemed Corporation (CHE), a Zacks #1 Rank stock, beat the Street?s earnings estimate in 10 out of the past 12 quarters by an average margin of 11.2%. Analysts have been upping their profit forecasts for both this year and next. Earnings per share are expected to grow 16% over the next 3-5 years. CHE has a current dividend yield of 0.52% and its return on equity tops that of the industry average?14% compared to 11%.

Full Analysis

Chemed Corporation operates in two divisions: Vitas and Roto-Rooter. The company?s Vitas division focuses on noncurative hospice care for terminally ill patients. This division provides direct medical services and counseling to patients and their families through its team of doctors, nurses, home health aids, social workers, clergy and volunteers. CHE?s Roto-Rooter division offers plumbing and drain cleaning services through company-owned branches, independent contractors and franchisees.

CHE exceeded analysts? earnings expectations in 10 out of the past 12 quarters by an average margin of 11.2%. In six out of the aforementioned 10 quarters the company surprised by a double-digit percentage.

On Feb 20, CHE posted fourth-quarter earnings per share of 71 cents, easily surpassing the Street?s estimate of 57 cents by an impressive 24.6%. Compared to profits of 61 cents per share in the prior-year period, the result amounted to a 16.4% year-over-year improvement. Revenues jumped 10.7% to $271.9 million from $245.7 million in the year-ago period.

For the entire year, profits came in at $50.7 million, versus $35.8 million in 2005. Revenues increased 11.4% to $1.02 billion from $916 million last year. CHE increased revenues and grew profits for the past three years.

Looking ahead, CHE projects 2007 earnings per share between $2.45 and $2.60. Analysts responded to the company?s bullish guidance by adjusting their earnings estimates for both this year and next. The consensus estimate for 2007 currently sits at $2.43 and represents a 6.1% increase over the past 30 days. Seven of the eight covering analysts upped their estimates. Profit forecasts for next year have risen 8.7% to $2.74 over the same period of time. Four of the six covering analysts submitted upward revisions. Earnings per share are expected to grow 16% over the next 3-5 years.

On Feb 16, the Board of Directors declared a quarterly cash dividend of six cents per share. CHE has a current dividend yield of 0.52% and a five-year average dividend yield of 0.91%. The company?s return on equity tops that of the industry average?14% compared to 11%.

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