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Here's Why Chemed (CHE) Should Remain in Your Portfolio Now
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Chemed Corporation (CHE - Free Report) has been gaining investors’ confidence, courtesy of its strength in core business segments and a promising return to its shareholders.
In the past year, shares of this Ohio-based company have rallied 15% versus the industry’s 15.9% decline.
Riding on a few solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to for the moment.
What’s Favoring the Stock?
VITAS’ Bright Prospects: Chemed has been registering a strong performance from VITAS business over the last few quarters. During the first quarter of 2019, net revenues at VITAS reflected significant year-over-year growth, driven by an uptick in geographically weighted average Medicare reimbursement rate.
Roto-Rooter’s Steady Expansion: This business is putting up a robust show in the core plumbing and drain cleaning service segments besides solid growth in water restoration. The company’s acquisition of five formerly independent Roto-Rooter franchises, covering several areas of Northern California, buoys investors’ optimism on the stock.
Strong Cash Balance: Chemed exited the first quarter with cash and cash equivalents of $8.8 million, reflecting a significant surge from $4.8 million at the end of 2018. At first-quarter end, net cash provided by operating activities was $73.6 million compared with $65.2 million a year ago. This indicates an impressive return of funds to shareholders.
Downsides:
However, there are a few factors that have been impeding the stock’s growth prospects.
Tough Competitive Landscape: Hospice care industry in the United States sees an acute contest as programs for hospice services are generally uniform. As the hospice care industry is highly fragmented, VITAS competes with a large number of organizations on the basis of its ability to deliver quality and responsive services.
Reliance on Government Mandates: Over 90% of VITAS’ revenues comprises payments from the Medicare and Medicaid programs. The Medicare and Medicaid programs are escalating pressure to control health care costs and cut/limit hikes in reimbursement rates for health care services.
Which Way Are Estimates Moving?
For the to-be-reported quarter, the Zacks Consensus Estimate for earnings is pegged at $3.09, indicating 9.9% growth from the year-ago quarter’s reported figure. The consensus mark for revenues stands at $469.8 million, implying a 6.3% improvement from revenues reported in the year-earlier quarter.
For 2019, the Zacks Consensus Estimate for earnings is pinned at $12.77, suggesting 7% rise from the prior-year period’s reported number. The same for revenues is pegged at $1.90 billion, indicating a climb of 6.7% from revenues reported in the comparable quarter last year.
Teleflex’s long-term earnings growth rate is expected to be 13.7%.
Penumbra’s long-term earnings growth rate is projected at 21.5%.
Bruker’s long-term earnings growth rate is estimated at 11.7%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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Here's Why Chemed (CHE) Should Remain in Your Portfolio Now
Chemed Corporation (CHE - Free Report) has been gaining investors’ confidence, courtesy of its strength in core business segments and a promising return to its shareholders.
In the past year, shares of this Ohio-based company have rallied 15% versus the industry’s 15.9% decline.
Riding on a few solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to for the moment.
What’s Favoring the Stock?
VITAS’ Bright Prospects: Chemed has been registering a strong performance from VITAS business over the last few quarters. During the first quarter of 2019, net revenues at VITAS reflected significant year-over-year growth, driven by an uptick in geographically weighted average Medicare reimbursement rate.
Roto-Rooter’s Steady Expansion: This business is putting up a robust show in the core plumbing and drain cleaning service segments besides solid growth in water restoration. The company’s acquisition of five formerly independent Roto-Rooter franchises, covering several areas of Northern California, buoys investors’ optimism on the stock.
Strong Cash Balance: Chemed exited the first quarter with cash and cash equivalents of $8.8 million, reflecting a significant surge from $4.8 million at the end of 2018. At first-quarter end, net cash provided by operating activities was $73.6 million compared with $65.2 million a year ago. This indicates an impressive return of funds to shareholders.
Downsides:
However, there are a few factors that have been impeding the stock’s growth prospects.
Tough Competitive Landscape: Hospice care industry in the United States sees an acute contest as programs for hospice services are generally uniform. As the hospice care industry is highly fragmented, VITAS competes with a large number of organizations on the basis of its ability to deliver quality and responsive services.
Reliance on Government Mandates: Over 90% of VITAS’ revenues comprises payments from the Medicare and Medicaid programs. The Medicare and Medicaid programs are escalating pressure to control health care costs and cut/limit hikes in reimbursement rates for health care services.
Which Way Are Estimates Moving?
For the to-be-reported quarter, the Zacks Consensus Estimate for earnings is pegged at $3.09, indicating 9.9% growth from the year-ago quarter’s reported figure. The consensus mark for revenues stands at $469.8 million, implying a 6.3% improvement from revenues reported in the year-earlier quarter.
For 2019, the Zacks Consensus Estimate for earnings is pinned at $12.77, suggesting 7% rise from the prior-year period’s reported number. The same for revenues is pegged at $1.90 billion, indicating a climb of 6.7% from revenues reported in the comparable quarter last year.
Key Picks
Some better-ranked stocks in the broader medical space are Teleflex Inc. (TFX - Free Report) , Penumbra (PEN - Free Report) and Bruker Corporation (BRKR - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Teleflex’s long-term earnings growth rate is expected to be 13.7%.
Penumbra’s long-term earnings growth rate is projected at 21.5%.
Bruker’s long-term earnings growth rate is estimated at 11.7%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>