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Here's Why You Should Add Ensign Stock to Your Portfolio Now
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The Ensign Group, Inc. (ENSG - Free Report) is well-poised to grow due to the rising demand for healthcare services. Its moves to expand its geographic reach and increase market density, combined with improving occupancy, will boost its results. ENSG stock has gained 2.2% over the past month, outperforming the industry and the S&P 500 Index.
One-Month Price Performance – ENSG, Industry & S&P 500
Image Source: Zacks Investment Research
Headquartered in San Juan Capistrano, CA, ENSG operates as a provider of skilled nursing, senior living, rehabilitative and other services. With a market cap of $7.8 billion, it also has a profitable real estate business. We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it is poised to carry the momentum ahead.
Let's see what makes ENSGstock an attractive investment option at the moment.
Encouraging Estimates for ENSG
The Zacks Consensus Estimate for Ensign’s 2024 and 2025 EPS implies a 15.1% and 10.7% uptick, respectively, on a year-over-year basis. The earnings estimates remained stable over the past month. Also, the consensus mark for 2024 and 2025 revenues suggests a 14% and 11% increase, respectively.
The company’s valuation looks relatively cheap compared with the industry average. Currently, Ensign is trading at 22.39X forward 12-month earnings, below the industry’s average of 31.29X. ENSG also has a Value Score of B.
Due to its solid prospects, Ensign currently has a Zacks Rank #2 (Buy).
ENSG’s Tailwinds
Rising service and rental revenues are likely to support its top-line growth. Our estimate for service revenues for 2024 suggests almost 14% year-over-year growth, followed by more than 10% growth in 2025.
The company’s occupancy level and patient days are on the rise. We expect total facility occupancy levels to rise to 80.7% in 2024 and 83.8% in 2025 from the 2023 level of 78.5%. Actual patient days rose 9.4% in the first nine months of 2024, and the momentum is expected to continue in the coming days.
Ensign has shown a strong track record of growth through strategic acquisitions, focusing on real estate and post-acute care operations. It acquires operations and transforms them into market leaders. It recently purchased the operations of eight skilled nursing facilities in Tennessee and one such facility in Alabama.
Its balance sheet strength is likely to continue supporting its acquisition efforts. Its long-term debt to capital of 7.5% compares favorably with the industry’s average of 76.2%.
A Risk
However, there is a factor that investors should keep a careful eye on.
Ensign’s persistent increase in total expenses is affecting its margin growth. Our estimate for 2024 expenses suggests a 12.1% year-over-year increase, following a 27.3% jump in 2023. Nevertheless, we believe that a systematic and strategic plan of action will drive efficiency and growth in the long term.
The Zacks Consensus Estimate for LifeStance’s 2024 earnings indicates a 60.8% year-over-year improvement. LFST beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. The consensus mark for revenues implies 17.3% growth from the year-ago period.
The Zacks Consensus Estimate for U.S. Physical’s 2024 earnings indicates 4.3% year-over-year growth. USPH beat earnings estimates in two of the trailing four quarters and missed twice. The consensus mark for its 2024 revenues indicates 9.8% year-over-year growth.
The Zacks Consensus Estimate for Medpace’s 2024 earnings implies a 34.4% increase from the year-ago reported figure. MEDP beat earnings estimates in each of the trailing four quarters, with an average surprise of 14.7%. The consensus mark for its current-year revenues is pegged at $2.1 billion, which indicates an 11.8% year-over-year increase.
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Here's Why You Should Add Ensign Stock to Your Portfolio Now
The Ensign Group, Inc. (ENSG - Free Report) is well-poised to grow due to the rising demand for healthcare services. Its moves to expand its geographic reach and increase market density, combined with improving occupancy, will boost its results. ENSG stock has gained 2.2% over the past month, outperforming the industry and the S&P 500 Index.
One-Month Price Performance – ENSG, Industry & S&P 500
Headquartered in San Juan Capistrano, CA, ENSG operates as a provider of skilled nursing, senior living, rehabilitative and other services. With a market cap of $7.8 billion, it also has a profitable real estate business. We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it is poised to carry the momentum ahead.
Let's see what makes ENSGstock an attractive investment option at the moment.
Encouraging Estimates for ENSG
The Zacks Consensus Estimate for Ensign’s 2024 and 2025 EPS implies a 15.1% and 10.7% uptick, respectively, on a year-over-year basis. The earnings estimates remained stable over the past month. Also, the consensus mark for 2024 and 2025 revenues suggests a 14% and 11% increase, respectively.
See the Zacks Earnings Calendar to stay ahead of market-making news.
The company beat earnings estimates in each of the past four quarters, with an average of 1.3%. This is depicted in the figure below.
The Ensign Group, Inc. Price and EPS Surprise
The Ensign Group, Inc. price-eps-surprise | The Ensign Group, Inc. Quote
ENSG’s Attractive Valuation & Rank
The company’s valuation looks relatively cheap compared with the industry average. Currently, Ensign is trading at 22.39X forward 12-month earnings, below the industry’s average of 31.29X. ENSG also has a Value Score of B.
Due to its solid prospects, Ensign currently has a Zacks Rank #2 (Buy).
ENSG’s Tailwinds
Rising service and rental revenues are likely to support its top-line growth. Our estimate for service revenues for 2024 suggests almost 14% year-over-year growth, followed by more than 10% growth in 2025.
The company’s occupancy level and patient days are on the rise. We expect total facility occupancy levels to rise to 80.7% in 2024 and 83.8% in 2025 from the 2023 level of 78.5%. Actual patient days rose 9.4% in the first nine months of 2024, and the momentum is expected to continue in the coming days.
Ensign has shown a strong track record of growth through strategic acquisitions, focusing on real estate and post-acute care operations. It acquires operations and transforms them into market leaders. It recently purchased the operations of eight skilled nursing facilities in Tennessee and one such facility in Alabama.
Its balance sheet strength is likely to continue supporting its acquisition efforts. Its long-term debt to capital of 7.5% compares favorably with the industry’s average of 76.2%.
A Risk
However, there is a factor that investors should keep a careful eye on.
Ensign’s persistent increase in total expenses is affecting its margin growth. Our estimate for 2024 expenses suggests a 12.1% year-over-year increase, following a 27.3% jump in 2023. Nevertheless, we believe that a systematic and strategic plan of action will drive efficiency and growth in the long term.
Other Key Medical Picks
Some other top-ranked and promising stocks in the medical space are LifeStance Health Group, Inc. (LFST - Free Report) , U.S. Physical Therapy, Inc. (USPH - Free Report) and Medpace Holdings, Inc. (MEDP - Free Report) . While LifeStance currently sports a Zacks Rank #1 (Strong Buy), U.S. Physical and Medpace carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LifeStance’s 2024 earnings indicates a 60.8% year-over-year improvement. LFST beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. The consensus mark for revenues implies 17.3% growth from the year-ago period.
The Zacks Consensus Estimate for U.S. Physical’s 2024 earnings indicates 4.3% year-over-year growth. USPH beat earnings estimates in two of the trailing four quarters and missed twice. The consensus mark for its 2024 revenues indicates 9.8% year-over-year growth.
The Zacks Consensus Estimate for Medpace’s 2024 earnings implies a 34.4% increase from the year-ago reported figure. MEDP beat earnings estimates in each of the trailing four quarters, with an average surprise of 14.7%. The consensus mark for its current-year revenues is pegged at $2.1 billion, which indicates an 11.8% year-over-year increase.