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Ensign Group (ENSG) Up 5.1% Since Last Earnings Report: Can It Continue?

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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 5.1% 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 drivers.

Ensign Group Q1 Earnings Beat Estimates, Rise Y/Y

The Ensign Group delivered adjusted operating earnings of 55 cents per share in first-quarter 2019, beating the Zacks Consensus Estimate of 54 cents by 1.9%. Moreover, the metric improved 22.3% year over year on the back of higher revenues.

Adjusted net income in the quarter under review was $30.8 million, up 28% year over year.

Operational Update

Total revenues of $549 million increased 11.6% year over year in the reported quarter. This upside was driven by solid segmental performances. However, the metric missed the Zacks Consensus Estimate by 1.3%. Total Transitional and Skilled Services segment income was $58.8 million for the quarter under consideration, up 27.2% from the prior-year period.

Total Home Health and Hospice Services segment’s revenues were up 16% year over year to $46.1 million.

Segmental revenues for Senior Living Services rose 12.7% year over year to $40.7 million.

Total expenses escalated 11.4% year over year to $511.4 million due to higher cost of services plus general and administrative expenses.

Quarterly Segment Update

Transitional and Skilled Services

This segment generated revenues of $449.2 million, up 10.4% year over year. Notably, the segment accounted for 81.8% of total revenues in the reported quarter.

Senior Living Services

This segment generated operating revenues of $40.7 million, up 12.7% year over year with the segment contributing 7.4% to the company’s top line.

Home Health & Hospice Services

Total operating revenues in this segment were $46 billion, up 16% year over year. The same represented 8.4% of the total revenues.

Other Services

This segment delivered revenues of $13.1 million, surging 42.2% from the prior-year quarter and reflecting 2.4% of the total revenue base.

Financial Update

Total cash and cash equivalents increased 21.7% to $38 million from the level as of 2018 end.

As of Mar 31, 2019, long-term debt less current maturities was $240 million, up 3.2% from the level at 2018 end.

Cash from operations in the first three months of 2019 was $24 million, down 39% year over year.

Dividend Update

Ensign Group paid a quarterly cash dividend of 4.75 cents per share during the first quarter. The company has been hiking its dividend for the last 16 years.

2019 Outlook

Following solid first-quarter earnings, management now expects the metric in the range of $2.22-$2.30, up from the previous guidance of $2.17-$2.26. It also anticipates annual revenues between $2.34 billion and $2.40 billion, higher than the prior projection of $2.29-$2.35 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Ensign Group has a strong 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 top 40% 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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