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Why Is Ensign Group (ENSG) Down 4.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Ensign Group (ENSG - Free Report) . Shares have lost about 4.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ensign Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Ensign Group's Q4 Earnings Top Estimates, Improve Y/Y

Ensign Group delivered adjusted operating earnings of 80 cents per share in fourth-quarter 2020, surpassing the Zacks Consensus Estimate of 79 cents by 1.3%. Further, the bottom line improved 33.3% year over year.
The company’s results benefited from revenues.

Operational Update

Total revenues of $629 million increased 12.3% year over year in the reported quarter. However, the top line missed the Zacks Consensus Estimate by 1.6%.

Further, adjusted net income in the quarter under review was $44.9 million, up 33.9% from the prior-year quarter.

Total revenues in the Transitional and Skilled Services, the only reporting segment of the company, came in at $603 million, up 13.8% year over year.
However, total expenses increased 10.1% year over year to $573.1 million due to higher cost of services, rent – cost of services plus general and administrative expenses.

Financial Update

The company exited the fourth quarter with $236.5 million of cash and cash equivalents, soaring 299.8% from the level at 2019 end.

As of Dec 31, 2020, long-term debt less current maturities was $112.5 million, down 65.4% from the level at 2019 end.

Net cash from operating activities for 2020 summed $373.3 million, up 121% year over year.

Dividend Update

Ensign Group paid out a quarterly cash dividend of 5.25 cents per share during the quarter. This marks the 18th consecutive annual dividend hike, reflecting its commitment to enhance shareholder value.

2021 Guidance

Following solid fourth-quarter results, the company reaffirmed its current-year annual earnings guidance of $3.44-$3.56 per share.

It still expects its annual revenues in the band of $2.62-$2.69 billion.

Full-Year Results

For 2020, the company’s earnings per share came in at $3.13. This compares to the Zacks Consensus Estimate of $3.06 per share.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, Ensign Group has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Ensign Group has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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