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Here's Why Investors Should Hold Onto Ensign Group (ENSG)
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The Ensign Group, Inc. (ENSG - Free Report) continues to be in investors' good books owing to its inorganic growth strategy that led to top-line improvement. ENSG stood out as a lucrative investment option on the back of a robust portfolio. All these factors instill investors’ confidence in the stock.
ENSG has an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Over the past 60 days, the stock has witnessed its 2021 earnings estimate move 0.3% north.
Ensign Group’s trailing 12-month return on equity (ROE) reinforces its growth potential. Its ROE of 20.4% came against the industry’s negative ROE of 22.6%. This, in turn, reflects its tactical efficiency in utilizing its shareholders’ funds.
ENSG's revenues have been bolstering since 2012. Its healthy revenue stream is evident from its five-year CAGR (2015-2020) of 12.4%, driven by both its Medicaid and Medicare businesses. In the first nine months of 2021, total revenues rose 9.1% year over year. ENSG expects revenues for 2021 in the band of $2.62-$2.69 billion, the midpoint indicating a rise of 16% from the 2020 reported figure.
The nursing home player has been buying skilled nursing hubs for a while. For instance, last month, ENSG purchased the real-estate properties of five skilled nursing and assisted living facilities. Ensign Group remains keen on inking new deals for purchasing assets, the operations of which are entrusted with either an Ensign Group affiliate or any third party.
With each acquisition, ENSG sharpened its expertise, both clinically and financially. Ensign Group continues to actively seek transactions to acquire real- estate properties and lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses in the new and existing markets.
As of Sep 30, 2021, Ensign Group operated 242 facilities under long-term lease arrangements and has options to buy 11 of the 175 facilities. ENSG has a series of activities lined up going forward.
The solvency level impresses too. Its total debt is 12.8% of its capital, much lower than the industry’s average of 77.7%. Also, its times interest earned stands at 38.21X against the industry’s negative average of 1.16X. As of Sep 30, 2021, it had $304.6 million of cash and cash equivalents and a revolving line of credit of up to $350 million as available capacity, higher than its long-term debt less current maturities of $140.6 million.
Ensign Group has been a dividend-paying organization since 2002 and has increased its payout annually for the past 18 years. ENSG's board of directors recently approved a 5% hike in its quarterly dividend to enhance shareholder value. ENSG’s dividend payment is expected to continue.
Concurrent with the third-quarter results, ENSG raised its current-year earnings projection to $3.60-$3.68, up from the prior guidance of $3.55-$3.67. It still expects its annual revenues in the band of $2.62-$2.69 billion, the midpoint indicating a rise of 16% from the 2020 reported figure. The bullish guidance should buoy investors’ optimism on the stock.
The consensus mark for 2021 earnings indicates an upside of 15.9% from the year-ago reported figure.
ENSG's shares have gained 9.7% in a year's time, underperforming its industry’s growth of 11.4%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the medical sector are Molina Healthcare, Inc. (MOH - Free Report) , AmerisourceBergenCorporation and AMN Healthcare Services (AMN - Free Report) .
With a Zacks Rank #2 (Buy), Molina Healthcare is a multi-state managed care organization participating exclusively in government-sponsored healthcare programs, such as the Medicaid program and the State Children's Health Insurance Program (SCHIP), catering to low-income persons. Its earnings managed to beat mark in two of its trailing four quarters (missing the mark in the remaining two), the average beat being 4%.
AmerisourceBergen is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce health care costs and improve patient outcomes. With a Zacks Rank of 2 at present, ABC managed to come up with a trailing four-quarter surprise of 5.48%, on average.
AMN Healthcare Services is a travel healthcare staffing company with a Zacks Rank of 2 at present. It has a trailing four-quarter surprise of 19.51%, on average.
Shares of Molina Healthcare, AmerisourceBergen and AMN Healthcare Services have rallied 47.5%, 24.1% and 63.3% each in the past year.
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Here's Why Investors Should Hold Onto Ensign Group (ENSG)
The Ensign Group, Inc. (ENSG - Free Report) continues to be in investors' good books owing to its inorganic growth strategy that led to top-line improvement. ENSG stood out as a lucrative investment option on the back of a robust portfolio. All these factors instill investors’ confidence in the stock.
ENSG has an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Over the past 60 days, the stock has witnessed its 2021 earnings estimate move 0.3% north.
Ensign Group’s trailing 12-month return on equity (ROE) reinforces its growth potential. Its ROE of 20.4% came against the industry’s negative ROE of 22.6%. This, in turn, reflects its tactical efficiency in utilizing its shareholders’ funds.
Now let’s see what makes this currently Zacks Rank #3 (Hold) player an attractive stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ENSG's revenues have been bolstering since 2012. Its healthy revenue stream is evident from its five-year CAGR (2015-2020) of 12.4%, driven by both its Medicaid and Medicare businesses. In the first nine months of 2021, total revenues rose 9.1% year over year. ENSG expects revenues for 2021 in the band of $2.62-$2.69 billion, the midpoint indicating a rise of 16% from the 2020 reported figure.
The nursing home player has been buying skilled nursing hubs for a while. For instance, last month, ENSG purchased the real-estate properties of five skilled nursing and assisted living facilities. Ensign Group remains keen on inking new deals for purchasing assets, the operations of which are entrusted with either an Ensign Group affiliate or any third party.
With each acquisition, ENSG sharpened its expertise, both clinically and financially. Ensign Group continues to actively seek transactions to acquire real- estate properties and lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses in the new and existing markets.
As of Sep 30, 2021, Ensign Group operated 242 facilities under long-term lease arrangements and has options to buy 11 of the 175 facilities. ENSG has a series of activities lined up going forward.
The solvency level impresses too. Its total debt is 12.8% of its capital, much lower than the industry’s average of 77.7%. Also, its times interest earned stands at 38.21X against the industry’s negative average of 1.16X. As of Sep 30, 2021, it had $304.6 million of cash and cash equivalents and a revolving line of credit of up to $350 million as available capacity, higher than its long-term debt less current maturities of $140.6 million.
Ensign Group has been a dividend-paying organization since 2002 and has increased its payout annually for the past 18 years. ENSG's board of directors recently approved a 5% hike in its quarterly dividend to enhance shareholder value. ENSG’s dividend payment is expected to continue.
Concurrent with the third-quarter results, ENSG raised its current-year earnings projection to $3.60-$3.68, up from the prior guidance of $3.55-$3.67. It still expects its annual revenues in the band of $2.62-$2.69 billion, the midpoint indicating a rise of 16% from the 2020 reported figure. The bullish guidance should buoy investors’ optimism on the stock.
The consensus mark for 2021 earnings indicates an upside of 15.9% from the year-ago reported figure.
ENSG's shares have gained 9.7% in a year's time, underperforming its industry’s growth of 11.4%.
Stocks to Consider
Some better-ranked stocks in the medical sector are Molina Healthcare, Inc. (MOH - Free Report) , AmerisourceBergen Corporation and AMN Healthcare Services (AMN - Free Report) .
With a Zacks Rank #2 (Buy), Molina Healthcare is a multi-state managed care organization participating exclusively in government-sponsored healthcare programs, such as the Medicaid program and the State Children's Health Insurance Program (SCHIP), catering to low-income persons. Its earnings managed to beat mark in two of its trailing four quarters (missing the mark in the remaining two), the average beat being 4%.
AmerisourceBergen is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce health care costs and improve patient outcomes. With a Zacks Rank of 2 at present, ABC managed to come up with a trailing four-quarter surprise of 5.48%, on average.
AMN Healthcare Services is a travel healthcare staffing company with a Zacks Rank of 2 at present. It has a trailing four-quarter surprise of 19.51%, on average.
Shares of Molina Healthcare, AmerisourceBergen and AMN Healthcare Services have rallied 47.5%, 24.1% and 63.3% each in the past year.