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Tenet Healthcare, a Zacks Rank #1 (Strong Buy), operates as a diversified health care services company in the United States. Shares of the health care provider are widely outperforming the market this year with the backing of a leading industry group. The stock is hitting a series of 52-week highs and displaying relative strength as buying pressure accumulates in this top-ranked stock.
THC stock is part of the Zacks Medical – Hospital industry group, which currently ranks in the top 1% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months, just as it has consistently throughout the year:
Image Source: Zacks Investment Research
This industry is also showing favorable characteristics as we can see below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Tenet Healthcare (THC - Free Report) owns and operates general hospitals and health care facilities. Its hospitals offer acute care services, operating and recovery rooms, radiology and respiratory therapy services, clinical laboratories, and pharmacies.
The company also provides intensive and critical care, along with services related to a variety of diseases such as cardiovascular, digestive, and musculoskeletal. Furthermore, Tenet Healthcare boasts one of the largest investor-owned health care delivery services.
The hospital owner’s revenue growth is fueled by increasing patient admissions, emergency room visits, and surgeries. A strategy of acquisitions and alliances aims to bolster the scale of its business through inorganic growth.
Earnings Trends and Future Estimates
The top-ranked company has put together an impressive earnings history, surpassing earnings estimates in each of the past eighteen consecutive quarters. Back in July, Tenet Healthcare reported second-quarter earnings of $2.31/share, a 22.2% surprise over the $1.89/share consensus estimate.
The health care giant has delivered a trailing four-quarter average earnings surprise of 58.5%. Consistently beating earnings estimates is a recipe for success and bolsters the bullish case.
THC shares received a boost as analysts covering the company have been increasing their third-quarter earnings estimates lately. For the current quarter, earnings estimates have risen 10.95% in the past 60 days. The Q3 Zacks Consensus EPS Estimate now stands at $2.33/share, reflecting a potential growth rate of 61.8% relative to the year-ago period.
Image Source: Zacks Investment Research
Let’s Get Technical
THC stock has advanced more than 115% this year alone. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Only stocks that are in extremely powerful uptrends are able to witness this type of price move. THC shares broke out to a series of 52-week highs this year, even in the late-July period while the general market pulled back. Stocks that hold up well through periods of volatility tend to lead the next leg higher.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been widely outperforming the major indices, indicating a prolonged period of relative strength. With both strong fundamental and technical indicators, THC stock is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Tenet Healthcare has recently witnessed positive revisions. As long as this trend remains intact (and THC continues to deliver earnings beats), the stock will likely continue its bullish run into the end of this year and beyond.
Bottom Line
THC stock is ranked favorably by our Zacks Style Scores, with top ‘A’ marks in our Value and Momentum categories. This indicates that the stock is likely to move higher based on promising earnings and price momentum metrics, in addition to favorable valuation characteristics.
Backed by a top industry group and impressive history of earnings beats, it’s not difficult to see why this company is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix. The future looks bright for this highly-ranked, leading stock.
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Bull of the Day: Tenet Healthcare (THC)
Tenet Healthcare, a Zacks Rank #1 (Strong Buy), operates as a diversified health care services company in the United States. Shares of the health care provider are widely outperforming the market this year with the backing of a leading industry group. The stock is hitting a series of 52-week highs and displaying relative strength as buying pressure accumulates in this top-ranked stock.
THC stock is part of the Zacks Medical – Hospital industry group, which currently ranks in the top 1% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months, just as it has consistently throughout the year:
Image Source: Zacks Investment Research
This industry is also showing favorable characteristics as we can see below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Tenet Healthcare (THC - Free Report) owns and operates general hospitals and health care facilities. Its hospitals offer acute care services, operating and recovery rooms, radiology and respiratory therapy services, clinical laboratories, and pharmacies.
The company also provides intensive and critical care, along with services related to a variety of diseases such as cardiovascular, digestive, and musculoskeletal. Furthermore, Tenet Healthcare boasts one of the largest investor-owned health care delivery services.
The hospital owner’s revenue growth is fueled by increasing patient admissions, emergency room visits, and surgeries. A strategy of acquisitions and alliances aims to bolster the scale of its business through inorganic growth.
Earnings Trends and Future Estimates
The top-ranked company has put together an impressive earnings history, surpassing earnings estimates in each of the past eighteen consecutive quarters. Back in July, Tenet Healthcare reported second-quarter earnings of $2.31/share, a 22.2% surprise over the $1.89/share consensus estimate.
The health care giant has delivered a trailing four-quarter average earnings surprise of 58.5%. Consistently beating earnings estimates is a recipe for success and bolsters the bullish case.
THC shares received a boost as analysts covering the company have been increasing their third-quarter earnings estimates lately. For the current quarter, earnings estimates have risen 10.95% in the past 60 days. The Q3 Zacks Consensus EPS Estimate now stands at $2.33/share, reflecting a potential growth rate of 61.8% relative to the year-ago period.
Image Source: Zacks Investment Research
Let’s Get Technical
THC stock has advanced more than 115% this year alone. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Only stocks that are in extremely powerful uptrends are able to witness this type of price move. THC shares broke out to a series of 52-week highs this year, even in the late-July period while the general market pulled back. Stocks that hold up well through periods of volatility tend to lead the next leg higher.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been widely outperforming the major indices, indicating a prolonged period of relative strength. With both strong fundamental and technical indicators, THC stock is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Tenet Healthcare has recently witnessed positive revisions. As long as this trend remains intact (and THC continues to deliver earnings beats), the stock will likely continue its bullish run into the end of this year and beyond.
Bottom Line
THC stock is ranked favorably by our Zacks Style Scores, with top ‘A’ marks in our Value and Momentum categories. This indicates that the stock is likely to move higher based on promising earnings and price momentum metrics, in addition to favorable valuation characteristics.
Backed by a top industry group and impressive history of earnings beats, it’s not difficult to see why this company is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix. The future looks bright for this highly-ranked, leading stock.