Universal Health Services Inc. (UHS - Free Report) has been consistently gaining traction from 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 Acute Care and Behavioral Health Care platforms, each contributing 55% and 45% to the company’s 2019 revenues, deserve special mention. Acute Care is a branch of secondary healthcare wherein 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.
In 2019, the company added 250 new beds to its current acute and behavioral hospitals. Moreover, the company has been putting in efforts to grow its behavioral health joint venture portfolio of which three new facilities are already operational.
Apart from its solid segments, 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.
All these major factors have been driving its top line, creating an impressive trend for investors. The top line witnessed a 2010-2019 CAGR of 9.8%, led by segmental strengths, higher admissions and patient days. For 2020, the company expects net revenues to be between $11.96 billion and $12.11 billion, the midpoint indicating a 5.6% hike from the reported 2019 figure.
The company also boasts stable financial footing. It has been constantly allocating capital to share buybacks and dividend payouts, which should instill investor confidence in the stock.
Shares of this Zacks Rank #3 (Hold) company have lost 25.6% in a year's time, wider than its industry's decline of 20.1%.
Investors interested in the medical sector might consider some better-ranked stocks like Community Health Systems, Inc. (CYH - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Centene Corporation (CNC - Free Report) , each with a trailing four-quarter surprise of 54.9%, 3.7%, 3.3%, respectively, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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