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Ensign Group (ENSG) Hits 52 Week High: Will the Rally Continue?

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On Dec 7, shares of The Ensign Group, Inc. (ENSG - Free Report) touched a 52-week high of $73.98 before closing the session a tad lower at $73.87.

This upside can be attributed to investors’ confidence in the company’s ability to gain from its strong inorganic story that it has created over the past decade. In fact, investors’ optimism was buoyed by the company’s 2020 guidance raise despite the current economic scenario.

For the full year, earnings guidance is expected between $3.04 and $3.12, up from the previous view of $3-$3.10. The midpoint of this lifted outlook indicates a 58% rise from the 2019 adjusted results.

What’s Driving This Outperformance?

Recently, the company completed the buyout of operations of a San Marcos, TX-based skilled nursing facility, which contains 116 beds. The inclusion of Hays Nursing and Rehabilitation Center brings the total count of healthcare operations in the company’s portfolio to 228, which is spread across 13 states. Subject to a long-term, triple net lease, the transaction has already been effective since Dec 1, 2020. Significantly, last month, the company bought the real estate and operations of a Texas-based skilled nursing facility named The Medical Lodge of Amarillo.

It used acquisitions to supplement its organic efforts. These buyouts also proved to be accretive to its revenues and allowed it to grow in scale and size. The company’s historical growth is mainly driven by its expertise in acquiring real estate or leasing post-acute care operations and transforming the same into market leaders. Each acquisition sharpened its efficiency, both clinically and financially.

Ensign Group continues to actively seek transactions to purchase real estate and to lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses in the new and existing markets. There are already several buyouts in its pipeline, which are expected to close in the fourth quarter of 2020 and early 2021.

Its top line has been growing on the back of both its Medicaid and Medicare businesses. It also anticipates 2020 annual revenues in the band of $2.42-$2.45 billion, the midpoint implying an upside of 6.3% from the year-ago reported figure.

Ensign Group is well poised for growth owing to its strategic measures as well as a solid capital position.

We believe that these efforts will continue to augur well for the company in the long haul.

Its earnings estimate stands at $3.06, suggesting a 36.6% surge from the prior-year reported number.

The company carries a Zacks Rank #3 (Hold ), currently. Over the past year, the stock has rallied 74.6% compared with its industry’s growth of 21.2%.


Other companies in the same space, such as Acadia Healthcare Company, Inc. (ACHC - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Community Health Systems, Inc. (CYH - Free Report) have also gained 32%, 25.3% and 127.7%, respectively, over the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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