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Ensign Group (ENSG) Up 9.9% in 3 Months: More Room to Grow?
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The Ensign Group, Inc.’s (ENSG - Free Report) shares have jumped 9.9% in the past three months, thanks to portfolio boosting efforts and growing operations in Skilled services. The company has been gaining from the active inorganic growth strategy as the demand for healthcare-related services keeps rising.
Based in San Juan Capistrano, CA, Ensign Group provides healthcare services in the post-acute care continuum, urgent care center and mobile ancillary businesses in the United States. It has a market cap of $4.7 billion.
Can It Retain Momentum?
The answer is yes and before we get into the details, let us show you how its estimates for full-year 2022 stand. The Zacks Consensus Estimate for Ensign Group’s 2022 earnings is pegged at $4.07 per share, indicating an 11.8% rise from $3.64 a year ago. The company beat earnings estimates in each of the last four quarters, with an average of 1.7%. The consensus estimate for 2022 revenues stands at $2.9 billion, signaling a 12.1% year-over-year rise.
Now let’s delve into what’s driving the Zacks Rank #2 (Buy) stock.
Ensign Group’s expertise in acquiring real estate or leasing post-acute care operations and transforming them into market leaders is praiseworthy. Last year, it was successful in adding 20 operations to its portfolio. Early this month, ENSG purchased the operations of Amarsi Assisted Living in Glendale and Citadel Assisted Living Facility in Mesa, both in Arizona. Its affiliates also bought the real estate and operations of The Waterton Healthcare and Rehabilitation in Tyler, TX.
With the active acquisition strategy, ENSG’s portfolio jumped to 250 healthcare operations, 23 of which include senior living operations in 13 states. It now owns 102 real-estate assets. We expect all these moves to bode well for ENSG in the long haul.
Ensign Group’s revenues witnessed a seven-year (2014-2021) CAGR of 14%, driven by both Medicaid and Medicare businesses. Total revenues rose 9.4% year over year for 2021 on the back of higher service and rental revenues. The company’s growth strategies and acquisitions are likely to further drive the top line. It expects annual revenues for 2022 in the band of $2.93-$2.98 billion, whose midpoint signals a 12.4% rise from the 2021 reported figure.
ENSG’s financial strength continues to support shareholder value-boosting efforts. At 2021-end, it had $262.2 million of cash and cash equivalents, up 10.8% from the level at 2020-end, and a revolving line of credit of up to $350 million in available capacity, much higher than long-term debt less current maturities of $152.8 million. Total debt is 13.3% of its capital, much lower than the industry average of 79.5%.
Ensign Group efficiently deploys capital and boosts shareholder value. Frequent share repurchases and dividend payments at regular intervals have helped the company retain investors’ confidence in this stock. For this year, ENSG approved a new stock buyback plan of $20 million in February.
Risks
Despite the upside potential, there are a few factors that are holding back the stock’s growth. Rising expenses and declining free cash flows are major headwinds. Expenses rose 14.3% and 8.6% year over year for 2020 and 2021, respectively. This can affect its bottom line. Also, for the trailing 12-month period, free cash flow declined 30.5% to $208 million. Nevertheless, we believe that a systematic and strategic plan of action will drive long-term growth.
Compugen develops therapeutic and product candidates in the United States, Israel and Europe. Based in Holon, Israel, Compugen’s bottom-line estimates for 2022 have improved 25.7% in the past 30 days. In the last four quarters, CGEN beat earnings estimates thrice and met once, with an average surprise of 22%.
Galecto creates molecules utilized for treating inflammation, fibrosis, cancer and other drugs. The Zacks Consensus Estimate for GLTO’s 2022 bottom line has improved 1.4% in the past 30 days. Galecto beat earnings estimates thrice in the last four quarters and missed once, with an average surprise of 2.5%.
Doximity provides a digital platform for medical professionals in the country. The Zacks Consensus Estimate for DOCS’ full-year bottom line has improved 30.6% in the past 60 days. Headquartered in San Francisco, CA, Doximity beat earnings estimates in each of the last three quarters, with an average of 83.5%.
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Ensign Group (ENSG) Up 9.9% in 3 Months: More Room to Grow?
The Ensign Group, Inc.’s (ENSG - Free Report) shares have jumped 9.9% in the past three months, thanks to portfolio boosting efforts and growing operations in Skilled services. The company has been gaining from the active inorganic growth strategy as the demand for healthcare-related services keeps rising.
Based in San Juan Capistrano, CA, Ensign Group provides healthcare services in the post-acute care continuum, urgent care center and mobile ancillary businesses in the United States. It has a market cap of $4.7 billion.
Can It Retain Momentum?
The answer is yes and before we get into the details, let us show you how its estimates for full-year 2022 stand. The Zacks Consensus Estimate for Ensign Group’s 2022 earnings is pegged at $4.07 per share, indicating an 11.8% rise from $3.64 a year ago. The company beat earnings estimates in each of the last four quarters, with an average of 1.7%. The consensus estimate for 2022 revenues stands at $2.9 billion, signaling a 12.1% year-over-year rise.
The Ensign Group, Inc. Price and EPS Surprise
The Ensign Group, Inc. price-eps-surprise | The Ensign Group, Inc. Quote
Now let’s delve into what’s driving the Zacks Rank #2 (Buy) stock.
Ensign Group’s expertise in acquiring real estate or leasing post-acute care operations and transforming them into market leaders is praiseworthy. Last year, it was successful in adding 20 operations to its portfolio. Early this month, ENSG purchased the operations of Amarsi Assisted Living in Glendale and Citadel Assisted Living Facility in Mesa, both in Arizona. Its affiliates also bought the real estate and operations of The Waterton Healthcare and Rehabilitation in Tyler, TX.
With the active acquisition strategy, ENSG’s portfolio jumped to 250 healthcare operations, 23 of which include senior living operations in 13 states. It now owns 102 real-estate assets. We expect all these moves to bode well for ENSG in the long haul.
Ensign Group’s revenues witnessed a seven-year (2014-2021) CAGR of 14%, driven by both Medicaid and Medicare businesses. Total revenues rose 9.4% year over year for 2021 on the back of higher service and rental revenues. The company’s growth strategies and acquisitions are likely to further drive the top line. It expects annual revenues for 2022 in the band of $2.93-$2.98 billion, whose midpoint signals a 12.4% rise from the 2021 reported figure.
ENSG’s financial strength continues to support shareholder value-boosting efforts. At 2021-end, it had $262.2 million of cash and cash equivalents, up 10.8% from the level at 2020-end, and a revolving line of credit of up to $350 million in available capacity, much higher than long-term debt less current maturities of $152.8 million. Total debt is 13.3% of its capital, much lower than the industry average of 79.5%.
Ensign Group efficiently deploys capital and boosts shareholder value. Frequent share repurchases and dividend payments at regular intervals have helped the company retain investors’ confidence in this stock. For this year, ENSG approved a new stock buyback plan of $20 million in February.
Risks
Despite the upside potential, there are a few factors that are holding back the stock’s growth. Rising expenses and declining free cash flows are major headwinds. Expenses rose 14.3% and 8.6% year over year for 2020 and 2021, respectively. This can affect its bottom line. Also, for the trailing 12-month period, free cash flow declined 30.5% to $208 million. Nevertheless, we believe that a systematic and strategic plan of action will drive long-term growth.
Other Key Picks
Other top-ranked stocks in the Medical space include Compugen Ltd. (CGEN - Free Report) , Galecto, Inc. (GLTO - Free Report) and Doximity, Inc. (DOCS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Compugen develops therapeutic and product candidates in the United States, Israel and Europe. Based in Holon, Israel, Compugen’s bottom-line estimates for 2022 have improved 25.7% in the past 30 days. In the last four quarters, CGEN beat earnings estimates thrice and met once, with an average surprise of 22%.
Galecto creates molecules utilized for treating inflammation, fibrosis, cancer and other drugs. The Zacks Consensus Estimate for GLTO’s 2022 bottom line has improved 1.4% in the past 30 days. Galecto beat earnings estimates thrice in the last four quarters and missed once, with an average surprise of 2.5%.
Doximity provides a digital platform for medical professionals in the country. The Zacks Consensus Estimate for DOCS’ full-year bottom line has improved 30.6% in the past 60 days. Headquartered in San Francisco, CA, Doximity beat earnings estimates in each of the last three quarters, with an average of 83.5%.