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Reasons to Retain Chemed Stock in Your Portfolio Now
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Chemed Corporation (CHE - Free Report) is expected to grow in the upcoming quarters, backed by the prospects of the VITAS business. Strength within the company’s Roto-rooter brand looks impressive. Meanwhile, Chemed’s operations are vulnerable to a dull macroeconomic environment, which can adversely impact its financial results. Competitive disadvantages also add to the worry.
In the past year, this Zacks Rank #3 (Hold) stock has risen 11.7% compared with the industry’s 33.9% growth and the S&P 500 composite’s 32.3% increase.
The renowned hospice care provider has a market capitalization of $8.72 billion. Chemed has an estimated earnings growth rate of 16.2% for 2024, higher than the S&P 500’s 15.7% growth. In the trailing four quarters, the company delivered an average earnings surprise of 1.88%.
Let’s delve deeper.
Chemed: Key Upsides
VITAS’ Bright Prospects: The segment has successfully registered accelerated improvement over the past year. VITAS marked a robust start to the second quarter with the acquisition of Covenant Health and Community Services (Covenant). The investment boosted VITAS’ operational metrics, including an 11% improvement in admissions and a 14.4% increase in ADC (Average Daily Census). During the second quarter, Covenant’s contribution to VITAS’ net revenue growth was in the $8.2-$8.5 million range.
In the second quarter, VITAS’ net revenues were up 16.7% year over year, driven by a 2.5% rise in the geographically weighted average Medicare reimbursement rate and a 14.4% increase in days of care. Additionally, the net bedside headcount increased 234 licensed professionals. The company is highly bullish on VITAS, sustaining the above-average historical growth organically and through potential acquisitions in the coming years.
Roto-Rooter Shows Resilience: Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. In the second quarter of 2024, the close rates at the call center, at the time of dispatch, and when a technician reaches the customer location remained consistently strong compared to historical levels.
Following the temporary deprioritization during the pandemic, the commercial business has been facing unprecedented high demand. Since then, the company has rolled out several initiatives that should have a significant positive impact on this sector. These include the addition of commercial sales staff and enhanced customer relationship management capabilities to improve the efficiency of the expanded sales staff. Furthermore, Roto-Rooter management has implemented specific targeted improvement programs across some of its branches to drive positive results in the upcoming quarters.
Chemed: Key Downsides
Macroeconomic Headwinds: The ongoing global economic conditions, along with political and regulatory developments, are escalating expenses, particularly in staffing and labor costs. Recently, Chemed’s performance has been affected by the inflationary trend, increased logistics costs and higher employee-related expenses. In the second quarter, the cost of services provided and goods sold rose 4.2% year over year, while selling, general and administration expenses increased 7.7%.
Image Source: Zacks Investment Research
Tough Competitive Landscape: Roto-Rooter operates in the highly competitive market for sewer, drain, and pipe cleaning and plumbing repair businesses. Hospice care in the United States is also competitive, as programs for hospice services are generally uniform. VITAS competes with a large number of organizations based on its ability to deliver quality, responsive services. Roto-Rooter and VITAS could face challenges in their operations if they are unable to innovate and respond effectively to market trends.
Chemed's Estimate Trend
The Zacks Consensus Estimate for Chemed’s 2024 earnings per share (EPS) has remained constant at $23.58 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $2.44 billion. This suggests a 7.75% rise from the year-ago reported number.
TransMedix Group’s earnings are expected to surge 258.4% in 2024. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Shares of the company have risen 179.1% in the past year compared with the industry’s 20.3% growth. TMDX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AxoGen, carrying a Zacks Rank #2 (Buy) at present, has an earning yield of 94.1% compared with the industry’s 12.3%. Shares of the company have risen 212.8% compared with the industry’s 20.3% growth over the past year. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.46%.
Phibro, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 21% for fiscal 2025 compared with the industry’s 12.6%. In the past year, shares of PAHC have risen 69.9% compared with the industry’s 24% growth. PAHC delivered a trailing four-quarter average earnings surprise of 4.10%.
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Reasons to Retain Chemed Stock in Your Portfolio Now
Chemed Corporation (CHE - Free Report) is expected to grow in the upcoming quarters, backed by the prospects of the VITAS business. Strength within the company’s Roto-rooter brand looks impressive. Meanwhile, Chemed’s operations are vulnerable to a dull macroeconomic environment, which can adversely impact its financial results. Competitive disadvantages also add to the worry.
In the past year, this Zacks Rank #3 (Hold) stock has risen 11.7% compared with the industry’s 33.9% growth and the S&P 500 composite’s 32.3% increase.
The renowned hospice care provider has a market capitalization of $8.72 billion. Chemed has an estimated earnings growth rate of 16.2% for 2024, higher than the S&P 500’s 15.7% growth. In the trailing four quarters, the company delivered an average earnings surprise of 1.88%.
Let’s delve deeper.
Chemed: Key Upsides
VITAS’ Bright Prospects: The segment has successfully registered accelerated improvement over the past year. VITAS marked a robust start to the second quarter with the acquisition of Covenant Health and Community Services (Covenant). The investment boosted VITAS’ operational metrics, including an 11% improvement in admissions and a 14.4% increase in ADC (Average Daily Census). During the second quarter, Covenant’s contribution to VITAS’ net revenue growth was in the $8.2-$8.5 million range.
In the second quarter, VITAS’ net revenues were up 16.7% year over year, driven by a 2.5% rise in the geographically weighted average Medicare reimbursement rate and a 14.4% increase in days of care. Additionally, the net bedside headcount increased 234 licensed professionals. The company is highly bullish on VITAS, sustaining the above-average historical growth organically and through potential acquisitions in the coming years.
Roto-Rooter Shows Resilience: Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. In the second quarter of 2024, the close rates at the call center, at the time of dispatch, and when a technician reaches the customer location remained consistently strong compared to historical levels.
Following the temporary deprioritization during the pandemic, the commercial business has been facing unprecedented high demand. Since then, the company has rolled out several initiatives that should have a significant positive impact on this sector. These include the addition of commercial sales staff and enhanced customer relationship management capabilities to improve the efficiency of the expanded sales staff. Furthermore, Roto-Rooter management has implemented specific targeted improvement programs across some of its branches to drive positive results in the upcoming quarters.
Chemed: Key Downsides
Macroeconomic Headwinds: The ongoing global economic conditions, along with political and regulatory developments, are escalating expenses, particularly in staffing and labor costs. Recently, Chemed’s performance has been affected by the inflationary trend, increased logistics costs and higher employee-related expenses. In the second quarter, the cost of services provided and goods sold rose 4.2% year over year, while selling, general and administration expenses increased 7.7%.
Image Source: Zacks Investment Research
Tough Competitive Landscape: Roto-Rooter operates in the highly competitive market for sewer, drain, and pipe cleaning and plumbing repair businesses. Hospice care in the United States is also competitive, as programs for hospice services are generally uniform. VITAS competes with a large number of organizations based on its ability to deliver quality, responsive services. Roto-Rooter and VITAS could face challenges in their operations if they are unable to innovate and respond effectively to market trends.
Chemed's Estimate Trend
The Zacks Consensus Estimate for Chemed’s 2024 earnings per share (EPS) has remained constant at $23.58 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $2.44 billion. This suggests a 7.75% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , AxoGen (AXGN - Free Report) , and Phibro Animal Health (PAHC - Free Report) .
TransMedix Group’s earnings are expected to surge 258.4% in 2024. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Shares of the company have risen 179.1% in the past year compared with the industry’s 20.3% growth. TMDX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AxoGen, carrying a Zacks Rank #2 (Buy) at present, has an earning yield of 94.1% compared with the industry’s 12.3%. Shares of the company have risen 212.8% compared with the industry’s 20.3% growth over the past year. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.46%.
Phibro, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 21% for fiscal 2025 compared with the industry’s 12.6%. In the past year, shares of PAHC have risen 69.9% compared with the industry’s 24% growth. PAHC delivered a trailing four-quarter average earnings surprise of 4.10%.