Chemed Corporation , a leading manufacturer of products and services primarily for the companion animal veterinary, has gained 5.1% over the last six months, thus beating the S&P 500’s 2.9% gain. The stock has a market cap of $3 billion. The company’s five-year expected growth rate is also impressive at 10%.
The company further represented a return of almost 42.2%, substantially higher than the industry’s 5.1% gain over the last year. With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick at the moment.
The company’s estimate revision trend for the current year has also been positive. In the past 60 days, one estimate moved north, with no movement in the opposite direction. The magnitude of estimate revision for earnings per share rose around 2.9% to $8.17 over the same time frame.
Let’s find out whether the recent positive trend is a sustainable one.
Chemed’s second-quarter 2017 performance was quite promising with the bottom line significantly improving on a year-over-year basis. This stellar performance was driven by the company’s increase in the average net Medicare reimbursement rate and average daily census.
Keeping this momentum up, encouraging revenue growth and raised guidance for 2017 further indicate the company’s brighter prospects. The promising outlook for both Roto-Rooter segment and bottom line also supports the company’s estimation of improved operating results in the upcoming quarters. In fact, the view raise was backed by the company’s expectation of significant gains from its Roto-Rooter business.
Chemed’s VITAS business was in trouble over the past few quarters due to certain admission coding changes initiated by the Centers for Medicare & Medicaid Services (CMS). However, management recently noted that the recent admission trends have been positive which should continue in the coming quarters. During second-quarter 2017, VITAS performed well, both financially and operationally, thereby surpassing the company’s estimates.
Additionally, the company’s strong cash balance enables it to carry out share repurchase programs and in turn, provides solid returns to investors.
Other Key Picks
Other top-ranked medical stocks are IDEXX Laboratories, Inc. (IDXX - Free Report) , Lantheus Holdings, Inc. (LNTH - Free Report) and Align Technology, Inc. (ALGN - Free Report) . While Align Technology sports a Zacks Rank #1 (Strong Buy), Lantheus Holdings and IDEXX Laboratories carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 6.8% over the last six months.
Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has surged 70.4% over the last six months.
Align Technology has a long-term expected earnings growth rate of 26.6%. The stock has rallied roughly 22.3% over the last three months.
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