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Here's Why You Should Steer Clear of Ensign Group (ENSG) Now
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The Ensign Group, Inc. (ENSG - Free Report) has been suffering a setback from elevated expenses and the COVID-19 induced pressure on its business.
Over the past 60 days, the stock has witnessed its 2020 and 2021 earnings estimates move 0.9% and 0.6% south, respectively, reflecting pessimism around the stock.
The company have been enduring coronavirus-induced business loss from last few weeks of March. This is because the pandemic required hospitals to halt their elective procedures for accommodating any potential spike in COVID-infected cases.
Cancellation of elective surgeries to make room for coronavirus-infected patients is hurting the company’s revenues. Ensign Group witnessed an overall occupancy decline last July with high COVID-positivity rates recorded across the states of Texas, Arizona and California. Although elected care procedures bounced back to some extent in October, we remain concerned about the numbers.
Ensign Group has also been witnessing elevated expenses since 2012. In the first nine months of 2020, expenses rose 15.8% year over year due to higher cost of services, general and administrative expenses, etc. The rising expense level persists to weigh on the company, denting its bottom line.
The stock is trading at a higher value than its industry average. Its current price-to-sales value stands at 1.7X, much above the industry's average of 0.5X. This makes its valuation expensive.
However, Ensign Group continues to actively seek transactions to purchase real estate and lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses in the new and existing markets.
Zacks Rank and Price Performance
Shares of this presently Zacks Rank #5 (Strong Sell) company have gained 82% in a year’s time, outperforming its industry’s growth of 29.5%. However, headwinds looming on the company will likely keep the stock stressed going forward.
Investors interested in the same space might take a look at some other better-ranked stocks, such as Tenet Healthcare Corporation (THC - Free Report) , Acadia Healthcare Company, Inc. (ACHC - Free Report) and Five Star Quality Care, Inc. .
Tenet Healthcare operates as a diversified healthcare services company. It currently sports a Zacks Rank #1. The company managed to deliver a trailing four-quarter earnings surprise of 188.1%, on average, beating on earnings in three quarters while missing the same in one.
Acadia Healthcare operates inpatient psychiatric facilities, residential treatment centers, group homes, etc. Currently carrying a Zacks Rank #2 (Buy), the company managed to beat estimates in all its trailing four quarters, the average being 20.8%.
Five Star Senior Living operates and manages senior living communities in the United States. With a Zacks Rank of 2 at present, the company delivered a trailing four-quarter earnings surprise of 100%, on average.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
Here's Why You Should Steer Clear of Ensign Group (ENSG) Now
The Ensign Group, Inc. (ENSG - Free Report) has been suffering a setback from elevated expenses and the COVID-19 induced pressure on its business.
Over the past 60 days, the stock has witnessed its 2020 and 2021 earnings estimates move 0.9% and 0.6% south, respectively, reflecting pessimism around the stock.
The company have been enduring coronavirus-induced business loss from last few weeks of March. This is because the pandemic required hospitals to halt their elective procedures for accommodating any potential spike in COVID-infected cases.
Cancellation of elective surgeries to make room for coronavirus-infected patients is hurting the company’s revenues. Ensign Group witnessed an overall occupancy decline last July with high COVID-positivity rates recorded across the states of Texas, Arizona and California. Although elected care procedures bounced back to some extent in October, we remain concerned about the numbers.
Ensign Group has also been witnessing elevated expenses since 2012. In the first nine months of 2020, expenses rose 15.8% year over year due to higher cost of services, general and administrative expenses, etc. The rising expense level persists to weigh on the company, denting its bottom line.
The stock is trading at a higher value than its industry average. Its current price-to-sales value stands at 1.7X, much above the industry's average of 0.5X. This makes its valuation expensive.
However, Ensign Group continues to actively seek transactions to purchase real estate and lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses in the new and existing markets.
Zacks Rank and Price Performance
Shares of this presently Zacks Rank #5 (Strong Sell) company have gained 82% in a year’s time, outperforming its industry’s growth of 29.5%. However, headwinds looming on the company will likely keep the stock stressed going forward.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Investors interested in the same space might take a look at some other better-ranked stocks, such as Tenet Healthcare Corporation (THC - Free Report) , Acadia Healthcare Company, Inc. (ACHC - Free Report) and Five Star Quality Care, Inc. .
Tenet Healthcare operates as a diversified healthcare services company. It currently sports a Zacks Rank #1. The company managed to deliver a trailing four-quarter earnings surprise of 188.1%, on average, beating on earnings in three quarters while missing the same in one.
Acadia Healthcare operates inpatient psychiatric facilities, residential treatment centers, group homes, etc. Currently carrying a Zacks Rank #2 (Buy), the company managed to beat estimates in all its trailing four quarters, the average being 20.8%.
Five Star Senior Living operates and manages senior living communities in the United States. With a Zacks Rank of 2 at present, the company delivered a trailing four-quarter earnings surprise of 100%, on average.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>