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Here's Why You Should Add Ensign Group to Your Portfolio
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The Ensign Group, Inc. (ENSG - Free Report) has been in investors' good books on the back of its inorganic growth story and solid capital position. Although the company suffered weak business volumes recently due to the coronavirus breakout, the easing of restrictions should help the stock recover.
Given the company’s strong fundamentals, it is well-placed for long-term growth.
The recent softness in business volumes due to the pandemic appears to be just a blip and that the metric should rebound once the prevalent market volatility subsidies.
For instance, some of its peers, such as HCA Healthcare, Inc. (HCA - Free Report) , Tenet Healthcare (THC - Free Report) , Universal Health Services and Amedisys (AMED - Free Report) witnessed volume recovery in May.
In the first quarter of 2020, the company delivered adjusted operating earnings of 77 cents per share, surpassing the Zacks Consensus Estimate by 24.2%. Further, the bottom line soared 92.5% year over year on the back of improved revenues.
Moreover, the company retained its 2020 guidance following solid first-quarter results. For the full year, earnings are expected between $2.50 and 2.58 per share, the midpoint indicating a hike of 29% from the year-ago reported figure. The company expects revenues in the $2.42-$2.45 billion band. This bullish guidance should instill investors’ confidence in the stock.
In response to the present troubled scenario, the company has taken certain cost-cutting measures including voluntary reduction in base salaries by the board of directors, the executive team and other key leaders. This, in turn, is likely to help the margins.
Ensign Group also boasts a strong inorganic growth profile. Its growth trajectory shows a history of accretive real-estate acquisitions or leasing of post-acute care operations and transforming the same into market leaders. Each acquisition helped the company hone its expertise, both clinically and financially. Ensign Group continues to actively seek transactions to take over real estate and lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses in the new and existing markets. In the first quarter, the company announced addition of four buyouts to its portfolio. We expect all these acquisitions to bode well for the long haul.
We should also note that the company’s top line has been growing since 2012. Its robust growth strategy, and Medicaid and Medicare businesses will likely drive its revenues consistently.
The company's balance sheet position also remains a positive. Its net debt is 65.3% of capital, much lower than the industry’s average of 96.3%. Also, its time interest earned stands at 10.1X, much higher than the industry average of 1.7X. Ensign Group has been a dividend-paying company since 2002 and has increased its annual payout in the past 17 straight years. The company continued with its capital deployment on the back of its financial flexibility despite the current volatile environment.
The company is well-poised for growth, which is also evident from its VGM Score of B.
Its 2020 earnings estimate stands at $2.55, indicating an upside of 13.8% from the year-ago reported figure.
Shares of the company have gained 3.6% year to date against its industry’s decline of 19.5%.
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Here's Why You Should Add Ensign Group to Your Portfolio
The Ensign Group, Inc. (ENSG - Free Report) has been in investors' good books on the back of its inorganic growth story and solid capital position.
Although the company suffered weak business volumes recently due to the coronavirus breakout, the easing of restrictions should help the stock recover.
Here we discuss the reasons for adding this Zacks Rank #2 (Buy) company to your investment portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Given the company’s strong fundamentals, it is well-placed for long-term growth.
The recent softness in business volumes due to the pandemic appears to be just a blip and that the metric should rebound once the prevalent market volatility subsidies.
For instance, some of its peers, such as HCA Healthcare, Inc. (HCA - Free Report) , Tenet Healthcare (THC - Free Report) , Universal Health Services and Amedisys (AMED - Free Report) witnessed volume recovery in May.
In the first quarter of 2020, the company delivered adjusted operating earnings of 77 cents per share, surpassing the Zacks Consensus Estimate by 24.2%. Further, the bottom line soared 92.5% year over year on the back of improved revenues.
Moreover, the company retained its 2020 guidance following solid first-quarter results. For the full year, earnings are expected between $2.50 and 2.58 per share, the midpoint indicating a hike of 29% from the year-ago reported figure. The company expects revenues in the $2.42-$2.45 billion band. This bullish guidance should instill investors’ confidence in the stock.
In response to the present troubled scenario, the company has taken certain cost-cutting measures including voluntary reduction in base salaries by the board of directors, the executive team and other key leaders. This, in turn, is likely to help the margins.
Ensign Group also boasts a strong inorganic growth profile. Its growth trajectory shows a history of accretive real-estate acquisitions or leasing of post-acute care operations and transforming the same into market leaders. Each acquisition helped the company hone its expertise, both clinically and financially. Ensign Group continues to actively seek transactions to take over real estate and lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses in the new and existing markets. In the first quarter, the company announced addition of four buyouts to its portfolio. We expect all these acquisitions to bode well for the long haul.
We should also note that the company’s top line has been growing since 2012. Its robust growth strategy, and Medicaid and Medicare businesses will likely drive its revenues consistently.
The company's balance sheet position also remains a positive. Its net debt is 65.3% of capital, much lower than the industry’s average of 96.3%. Also, its time interest earned stands at 10.1X, much higher than the industry average of 1.7X. Ensign Group has been a dividend-paying company since 2002 and has increased its annual payout in the past 17 straight years. The company continued with its capital deployment on the back of its financial flexibility despite the current volatile environment.
The company is well-poised for growth, which is also evident from its VGM Score of B.
Its 2020 earnings estimate stands at $2.55, indicating an upside of 13.8% from the year-ago reported figure.
Shares of the company have gained 3.6% year to date against its industry’s decline of 19.5%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>