Amedisys, Inc. (AMED - Free Report) has been gaining investors’ confidence on consistently positive results. Over the past year, the company’s share price has outperformed its industry. The stock has gained 117.7% against 13.7% fall of the industry. Also, the company has outperformed the S&P 500’s 6.8% decline.
This renowned home health and hospice services provider has a market cap of $3.73 billion. The company’s five-year projected growth rate is favorable at 18.8% compared with the industry’s 12.2%.
With solid prospects, this Zacks Rank #1 (Strong Buy) stock is an attractive pick for investors at the moment.
Per our Style Score, Amedisys has Growth Score of A, which is reflective of the company’s solid prospects. Our research shows that stocks with a Growth Style Score of A or B combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
What Makes the Stock an Attractive Pick?
Strategic Acquisitions and Partnerships to Add Values
Amedisys competes in a fragmented industry in partnership with a number of small local providers. The company is developing and acquiring new business lines that will complement its existing home care and hospice business, and help senior citizens manage health more effectively and stay in their homes longer.
Over the past year, Amedisys made a number of acquisitions, the recent one being Compassionate Care Hospice (CCH), a national hospice care provider headquartered in Parsippany, New Jersey, in October. The acquisition is expected to add significant access to Amedisys’ nationwide network of 83 hospice care centers. The same month, the company completed the acquisition of Bring Care Home, a personal care provider in northeastern Massachusetts. Earlier to that, Amedisys had acquired East Tennessee Personal Care Service (ETPCS), a personal care provider headquartered in Knoxville, TN.
Positive Demographic Trend
The home health industry is poised for tremendous growth in the long term, driven by the aging U.S. population, patients’ desire for independence, and home health as a cheaper care modality. The company should continue to benefit from the aging demographics of the U.S. population and the need for higher acuity patients to be taken care of in a home nursing environment.
In addition, with continued pressure on the U.S. healthcare system, we believe operators such as Amedisys will continue to benefit from increased volume shift from higher cost institutional settings to a lower cost environment such as home health.
Personal Care Prospects Bright
Amedisys has been witnessing impressive performance in its Personal Care business. Per management, this segment is stabilizing and performing per expectations. Moreover, the company is working on expanding the geographical presence of the Personal Care business through inorganic expansion.
Amedisys is currently integrating recent tuck-in acquisitions like Bring Care Home, East Tennessee Personal Care Services and Intercity.
Which Way Are Estimates Heading?
For the current quarter, the Zacks Consensus Estimate for earnings is pegged at 85 cents, reflecting year-over-year growth of 51.8%. The same for revenues stands at $426.5 million, mirroring a year-over-year improvement of 5.5%.
For 2018, the Zacks Consensus Estimate for earnings is pinned at $3.58, reflecting 62% year-over-year growth. The same for revenues is pegged at $1.66 billion.
Other Key Picks
Othertop-ranked stocks in the broader medical space are Veeva Systems (VEEV - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Surmodics, Inc. (SRDX - Free Report) .
Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock flaunts a Zacks Rank #1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Integer Holdings, with a Zacks Rank #1, has an earnings growth rate of 31.2% for the first quarter of 2019.
Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2, currently.
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