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Why Is Ensign Group (ENSG) Up 9.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Ensign Group (ENSG - Free Report) . Shares have added about 9.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ensign Group due for a pullback? 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 catalysts.

Ensign Group’s Q3 Earnings Beat, Up Y/Y

Ensign Group delivered adjusted operating earnings of 46 cents per share, beating the Zacks Consensus Estimate of 45 cents. Earnings improved 27.8% year over year owing to consistent financial results across business lines.

Net income for the quarter under review was $25 million, up 32.6 % year over year.

Operational Update

Total revenues of $514 million increased 8.9% year over year in the reported quarter and also beat the Zacks Consensus Estimate of $509 million by 0.9%. This upside was backed by solid segmental performances.

Total Transitional and Skilled Services segment income was $46.4 million for the quarter under consideration, up 25.7% from the prior-year period.

Total Assisted and Independent Living Services segment’s revenues and income were up 7.3% to $38.1 million and 9% to $4.7 million, respectively, year over year.

Segmental revenues and income at Total Home Health and Hospice Services were up 23.1% to $44.3 million and 55.4% to $7.3 million, each on a year-over-year basis.

Total expenses rose 10.5% year over year to $493 million due to higher cost of services and general and administrative expenses.

Quarterly Segment Update

Transitional and Skilled Services


This segment generated revenues of $429 million, up 8.9% year over year. Solid growth in the number of facilities and patient days boosted this impressive result. Notably, the segment accounted for 82.2% of the total revenues in the quarter under review.

Assisted and Independent Living Services

This segment generated operating revenues of $38 million, up 7.3% year over year with the segment contributing 7.3% to the company’s top line.

Home Health & Hospice Services

For this segment, total operating revenues were $44 billion, up 23.1% year over year. This segment represented 8.3% to the total revenues.

Other Services

This segment delivered revenues of $10.7 million, soaring 77% from the prior-year quarter. This segment reflected 2% of the total revenue base.

Financial Update

Total cash and cash equivalents increased 7% to $45 million from the year-end 2017 level.

As of Sep 30, 2018, long-term debt less current maturities was $245 million, down 19% from 2017-end level.

Cash from operations in the first nine months of 2018 was $157 million.

Dividend Update

Ensign Group paid a quarterly cash dividend of 4.50 cents per share during the third quarter. The company has been hiking its dividend for the last 16 years.

2018 Guidance

Management now expects its earnings to be in the range of $1.83-$1.88 per share, up from the band of $1.80-$1.87.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Ensign Group has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, 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

Ensign Group has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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