Universal Health Services Inc. (UHS - Free Report) is well-poised for growth on the back of robust segmental contributions, leading to rising revenues and a steady capital position.
The stock carries an impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Now let’s see what makes the company an investor favorite.
The company’s top line has been rising consistently rise since 2010, which is an impressive trend for investors. This positivity was driven by solid inorganic growth and strong segmental performances at both Acute Care and Behavioral Health. Revenues of the company were up 5.8% year over year in the first nine months of 2019, driven by higher admissions and patient days. In the first nine months of 2019, the company opened 183 beds at some of the busiest acute care and behavioral health hospitals, which are expected to contribute to its top line going forward.
Universal Health’s segmental contributions also deserve special mention. Acute Care is a branch of secondary healthcare where a patient receives short-term treatment for urgent medical conditions whereas the Behavioral Platform works on behavioral indications like eating disorders, sexual trauma, autism and disorderliness in the military through its patriot support program. Since 2012, average number of licensed beds in both segments have been rising, boosting revenues in turn.
Moreover, over the years, Universal Health’s acquisitions have been instrumental in carving out its growth track by adding facilities, beds and hospitals to its business portfolio. We believe, the company will carry on with a series of buyouts that will help boost its domestic and international presence alongside leveraging its position to weather the regulatory uncertainties in the healthcare sector.
The company also boasts steady financial strength. It has been constantly allocating capital to share buybacks and dividend payout, which should instill investor confidence in the stock.
For 2020, the Zacks Consensus Estimate for earnings per share stands at $10.65 on $11.82 billion revenues, implying a respective 8.6% and 3.9% increase from the prior-year reported numbers.
Shares of this Zacks Rank #3 (Hold) company have gained 10.5% in a year's time, outforming its industry's growth of 10.3%.
Stocks to Consider
Investors interested in the medical sector might consider some better-ranked stocks like The Ensign Group, Inc. (ENSG - Free Report) , WellCare Health Plans, Inc. (WCG - Free Report) and The Joint Corp. (JYNT - Free Report) .
Ensign Group provides health care services in the post-acute care continuum and other ancillary businesses. For the trailing four quarters, the company delivered an earnings beat of 1.5%, on average. It currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
WellCare Health offers managed care services to government-sponsored health care programs. The company came up with a positive surprise of 17.3%, on average, for the preceding four quarters. It currently sports a Zacks Rank #1.
The Joint Corp. develops, owns, operates, supports and manages chiropractic clinics. For the last four quarters, the company has an earnings beat of 175.8%, on average. The stock is presently Zacks #1 Ranked.
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