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The Ensign Group (ENSG) Up 6.2% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for The Ensign Group, Inc. (ENSG - Free Report) . Shares have added about 6.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
The Ensign Group Q4 Earnings Miss Estimates, Fall Y/Y
The Ensign Group reported fourth-quarter 2016 adjusted operating earnings of 30 cents per share that missed the Zacks Consensus Estimate of 34 cents by 11.8%. Earnings also declined 14.3% year over year.
For 2016, adjusted earnings came in at $1.29 per share, down 9.4% year over year.
Operational Update
Total revenue of $433 million increased nearly 16% year over year in the fourth quarter but missed the Zacks Consensus Estimate by 0.7%. For 2016, the top line displayed 23% year-over-year growth to $1.65 billion.
Total expenses at the end of the fourth quarter rose 14% year over year to $397.4 million due to higher cost of services, loss incurred from divestures and depreciation and amortization costs. For 2016, costs totaled $1.6 billion, up 33% year over year.
Quarterly Segment Update
The Transitional, Skilled & Assisted Living (TSA) Services Segment:
The segment reported revenues of $393.4 million, up 17% year over year. Solid growth in skilled nursing and facilities drove the upside. Notably, the segment accounted for 90.8% of the total revenue in the fourth quarter.
Home Health & Hospice Services
For this segment, total operating revenue was $31.1 billion, up 16% year over year. Strong growth in home health services resulted in the improvement. This segment contributed 7.2% of the total revenue.
Other Services
This segment reported revenues of $8.5 million, down 9.6% from the prior-year quarter. This segment accounted for 2% of the total revenue.
Financial Update
Total cash and cash equivalents increased 39% to $57.7 million as of Dec 31, 2016 from $41.6 million as of Dec 31, 2015.
Cash from operations at the end of 2016 soared 118% year over year to $73.9 million.
As of Dec 31, 2016, long-term debt was $275.5 million compared with only $99 million at the end of 2015.
Share Repurchase and Dividend Update
The Ensign Group’s board authorized a new stock repurchase program that allows the company to buy back up to $30 million of its common stock over the next 12 months. Under this plan, the company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws.
The year 2016 was the 14th consecutive year of dividend increases by the company. The Ensign Group raised its dividends by 6.3% in the fourth quarter and paid $0.0425 per share of its common stock to shareholders through dividends.
Guidance Updated for 2017
Management expects annual revenues in the range of $1.76 billion to $1.80 billion. It had earlier projected revenues in the range of $1.818 billion to $1.842 billion.
Annual earnings are now expected in the range $1.46–$1.53 per diluted share compared with $1.62–1.70 per diluted share guided previously.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, The Ensign Group's stock has a nice Growth Score of 'B', a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is equally suitable for growth, momentum and value investors.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.
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The Ensign Group (ENSG) Up 6.2% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for The Ensign Group, Inc. (ENSG - Free Report) . Shares have added about 6.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
The Ensign Group Q4 Earnings Miss Estimates, Fall Y/Y
The Ensign Group reported fourth-quarter 2016 adjusted operating earnings of 30 cents per share that missed the Zacks Consensus Estimate of 34 cents by 11.8%. Earnings also declined 14.3% year over year.
For 2016, adjusted earnings came in at $1.29 per share, down 9.4% year over year.
Operational Update
Total revenue of $433 million increased nearly 16% year over year in the fourth quarter but missed the Zacks Consensus Estimate by 0.7%. For 2016, the top line displayed 23% year-over-year growth to $1.65 billion.
Total expenses at the end of the fourth quarter rose 14% year over year to $397.4 million due to higher cost of services, loss incurred from divestures and depreciation and amortization costs. For 2016, costs totaled $1.6 billion, up 33% year over year.
Quarterly Segment Update
The Transitional, Skilled & Assisted Living (TSA) Services Segment:
The segment reported revenues of $393.4 million, up 17% year over year. Solid growth in skilled nursing and facilities drove the upside. Notably, the segment accounted for 90.8% of the total revenue in the fourth quarter.
Home Health & Hospice Services
For this segment, total operating revenue was $31.1 billion, up 16% year over year. Strong growth in home health services resulted in the improvement. This segment contributed 7.2% of the total revenue.
Other Services
This segment reported revenues of $8.5 million, down 9.6% from the prior-year quarter. This segment accounted for 2% of the total revenue.
Financial Update
Total cash and cash equivalents increased 39% to $57.7 million as of Dec 31, 2016 from $41.6 million as of Dec 31, 2015.
Cash from operations at the end of 2016 soared 118% year over year to $73.9 million.
As of Dec 31, 2016, long-term debt was $275.5 million compared with only $99 million at the end of 2015.
Share Repurchase and Dividend Update
The Ensign Group’s board authorized a new stock repurchase program that allows the company to buy back up to $30 million of its common stock over the next 12 months. Under this plan, the company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws.
The year 2016 was the 14th consecutive year of dividend increases by the company. The Ensign Group raised its dividends by 6.3% in the fourth quarter and paid $0.0425 per share of its common stock to shareholders through dividends.
Guidance Updated for 2017
Management expects annual revenues in the range of $1.76 billion to $1.80 billion. It had earlier projected revenues in the range of $1.818 billion to $1.842 billion.
Annual earnings are now expected in the range $1.46–$1.53 per diluted share compared with $1.62–1.70 per diluted share guided previously.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
The Ensign Group, Inc. Price and Consensus
The Ensign Group, Inc. Price and Consensus | The Ensign Group, Inc. Quote
VGM Scores
At this time, The Ensign Group's stock has a nice Growth Score of 'B', a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is equally suitable for growth, momentum and value investors.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.