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Here's Why You Should Add Chemed (CHE) to Your Portfolio Now
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Chemed Corporation (CHE - Free Report) has gained strong third-quarter 2021 results. The full-year strong projection for Roto-Rooter revenues as well as the company’s revised 2021 earnings per share (EPS) are expected to drive its rally further. However, pandemic-led disruption and business seasonality remain concerns.
Over the past year, shares of the Zacks Rank #2 (Buy) company have gained 4.9% against the industry’s 42% decline.
The renowned hospice care provider has a market capitalization of $7.92 billion. The company projects 7.7% growth for the next five years and expects to maintain its strong segmental performance. Further, it surpassed earnings estimates in three of the trailing four quarters, delivering a surprise of 5.59%, on average.
Let’s delve deeper.
Key Growth Drivers
Impressive Q3 Results: Chemed ended the third quarter of 2021 on a bullish note with better-than-expected earnings and revenues. The figures showed year-over-year improvement as well. The robust revenue growth across Roto-Rooter is encouraging. The decline in operating expenses and expansion of both margins during the quarter appear promising. Chemed exited the third quarter of 2021 will no long-term debt, which again is a positive.
Roto-Rooter Continues to Expand: In the third quarter, the segment surged 15.7% year over year. Further, total branch commercial revenues improved 10% on a 17.6% increase in drain cleaning revenues, 9.3% rise in commercial plumbing, 1.3% decline in excavation revenues and 9.4% hike in commercial water restoration revenues. Total Roto-Rooter branch residential revenues registered growth of 17.2% on an 11.7% rise in residential drain cleaning revenues, 17.4% improvement in plumbing, 14.1% increase in excavation and 28% growth in residential water restoration.
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Raised Guidance: For 2021, VITAS revenues prior to Medicare Cap are estimated to decline approximately 5% from the prior year (initial guidance announced in July projected VITAS revenues prior to Medicare Cap to decline approximately 4.5% from the prior year). Roto-Rooter is forecasted to achieve 2021 revenue growth of 17.3% (up from the earlier guidance of 15-15.5%). Full-year 2021 adjusted earnings per share (EPS) are estimated in the range of $19.00 to $19.20, signaling an improvement from the July-announced guidance of $18.20 to $18.50.
However, during the third quarter, the VITAS segment continued to be challenged by pandemic-led disruptions to senior housing occupancy and the recent hospice referrals. The company continued to witness disruption in referrals from senior housing, particularly from nursing homes and assisted-living facilities.
Apart from that, business seasonality has been affecting the company, as a major portion of the VITAS business operates in Florida. As the majority of Chemed’s patients are Medicare recipients, retirees relocating to Florida during the winter months generally result in higher admissions and revenues concentrated only within Florida during that period.
Estimate Trend
Chemed is witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.9% north to $19.14.
The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $544.3 million, suggesting a 2.1% rise from the year-ago reported number.
Thermo Fisher, currently carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO surpassed estimates in the trailing four quarters, the average surprise being 9.02%.
LabCorp, carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%. It currently sports a Zacks Rank #1.
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Here's Why You Should Add Chemed (CHE) to Your Portfolio Now
Chemed Corporation (CHE - Free Report) has gained strong third-quarter 2021 results. The full-year strong projection for Roto-Rooter revenues as well as the company’s revised 2021 earnings per share (EPS) are expected to drive its rally further. However, pandemic-led disruption and business seasonality remain concerns.
Over the past year, shares of the Zacks Rank #2 (Buy) company have gained 4.9% against the industry’s 42% decline.
The renowned hospice care provider has a market capitalization of $7.92 billion. The company projects 7.7% growth for the next five years and expects to maintain its strong segmental performance. Further, it surpassed earnings estimates in three of the trailing four quarters, delivering a surprise of 5.59%, on average.
Let’s delve deeper.
Key Growth Drivers
Impressive Q3 Results: Chemed ended the third quarter of 2021 on a bullish note with better-than-expected earnings and revenues. The figures showed year-over-year improvement as well. The robust revenue growth across Roto-Rooter is encouraging. The decline in operating expenses and expansion of both margins during the quarter appear promising. Chemed exited the third quarter of 2021 will no long-term debt, which again is a positive.
Roto-Rooter Continues to Expand: In the third quarter, the segment surged 15.7% year over year. Further, total branch commercial revenues improved 10% on a 17.6% increase in drain cleaning revenues, 9.3% rise in commercial plumbing, 1.3% decline in excavation revenues and 9.4% hike in commercial water restoration revenues. Total Roto-Rooter branch residential revenues registered growth of 17.2% on an 11.7% rise in residential drain cleaning revenues, 17.4% improvement in plumbing, 14.1% increase in excavation and 28% growth in residential water restoration.
Raised Guidance: For 2021, VITAS revenues prior to Medicare Cap are estimated to decline approximately 5% from the prior year (initial guidance announced in July projected VITAS revenues prior to Medicare Cap to decline approximately 4.5% from the prior year). Roto-Rooter is forecasted to achieve 2021 revenue growth of 17.3% (up from the earlier guidance of 15-15.5%). Full-year 2021 adjusted earnings per share (EPS) are estimated in the range of $19.00 to $19.20, signaling an improvement from the July-announced guidance of $18.20 to $18.50.
However, during the third quarter, the VITAS segment continued to be challenged by pandemic-led disruptions to senior housing occupancy and the recent hospice referrals. The company continued to witness disruption in referrals from senior housing, particularly from nursing homes and assisted-living facilities.
Apart from that, business seasonality has been affecting the company, as a major portion of the VITAS business operates in Florida. As the majority of Chemed’s patients are Medicare recipients, retirees relocating to Florida during the winter months generally result in higher admissions and revenues concentrated only within Florida during that period.
Estimate Trend
Chemed is witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.9% north to $19.14.
The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $544.3 million, suggesting a 2.1% rise from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks from the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , Laboratory Corporation of America Holdings (LH - Free Report) , or LabCorp and Medpace Holdings, Inc. (MEDP - Free Report) . You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher, currently carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO surpassed estimates in the trailing four quarters, the average surprise being 9.02%.
LabCorp, carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%. It currently sports a Zacks Rank #1.