Acadia Healthcare (ACHC) Up 42% in a Year: More Room to Run?
Shares of Acadia Healthcare Company, Inc. ACHC have soared 41.7% in a year against the industry’s 9.5% decline. The Medical sector and the S&P 500 composite index have lost 20.2% each in the same time frame. With a market capitalization of $7.6 billion, the average volume of shares traded in the last three months was 0.7 million.
Image Source: Zacks Investment Research
A strong U.S. business, bright long-term outlook, numerous growth-related initiatives in the form of acquisitions and joint ventures (JVs) coupled with a sound financial position continue to drive Acadia Healthcare.
The leading U.S. behavioral healthcare services provider with a current Zacks Rank #3 (Hold) has a decent track record of beating estimates in two of the trailing four quarters, meeting the mark once and missing the same once, the average beat being 3.49%.
Can ACHC Retain the Momentum?
The Zacks Consensus Estimate for Acadia Healthcare’s 2022 earnings is pegged at $3.10 per share, indicating a 21.1% increase on 12.1% higher revenues of $2.6 billion. ACHC expects adjusted earnings per share to lie within $3-$3.10 this year.
The Zacks Consensus Estimate for 2023 earnings stands at $3.33 per share, suggesting growth of 7.3% on 8.9% higher revenues of $2.8 billion. Management expects 2023 adjusted earnings per share to be between $3.10 and $3.45.
A well-performing U.S. business riding on solid patient volumes and operational efficiencies continues to drive revenues of Acadia Healthcare. Over the 2022-2028 period, management expects to achieve a CAGR in the range of 9-11% within revenues. In order to intensify focus on its well-performing unit, ACHC does not shy away from divesting the underperforming business units.
Acadia Healthcare’s impressive growth strategy comprising acquisitions and JVs, has led to continuous bed additions and the establishment of wholly-owned de novo facilities. These growth initiatives have not only broadened the healthcare network of ACHC but will continue to provide an impetus to its top-line growth in the days ahead.
As of Sep 30, 2022, the healthcare portfolio of Acadia Healthcare comprised 242 behavioral healthcare facilities located across 39 states and Puerto Rico. The continued incidence of mental health issues among Americans is expected to sustain the solid demand for behavioral healthcare services in the days ahead, which seems promising for ACHC.
Additionally, Acadia Healthcare boasts a robust financial position, substantiated by sufficient cash reserves to service short-term debt obligations coupled with adequate cash-generating abilities. These tailwinds pave the way for the behavioral healthcare provider to undertake uninterrupted growth-related investments.
Similar to ACHC, two other healthcare providers Ensign Group ENSG and Encompass Health Corporation EHC frequently resort to growth-related initiatives to build a solid healthcare suite on the back of a strong financial position.
Ensign Group follows an aggressive inorganic growth strategy with multiple buyouts being pursued almost every month of this year. Management continues to keep an eye on detecting opportunistic real-estate buyouts. It presently operates 271 skilled nursing and senior living facilities.
Encompass Health follows a swift geographical growth strategy by unveiling plans to construct inpatient rehabilitation hospitals armed with advanced rehabilitation technologies and inaugurating the same within the targeted time period. EHC’s current count of inpatient rehabilitation hospitals stands at 153, stretching across 36 states and Puerto Rico.
A Key Pick
A better-ranked stock in the Medical space is Medpace Holdings, Inc. MEDP which presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace’s earnings surpassed estimates in each of the last four quarters, the average surprise being 22.04%. The Zacks Consensus Estimate for MEDP’s 2022 earnings suggests an improvement of 44.9% from the year-ago reported figure, while the same for revenues indicates growth of 27.1%.
The consensus mark for Medpace’s 2022 earnings has moved north by 13.1% in the past 60 days. Shares of MEDP have lost 6.9% in a year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Acadia Healthcare Company, Inc. (ACHC) : Free Stock Analysis Report
The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report
Medpace Holdings, Inc. (MEDP) : Free Stock Analysis Report
Encompass Health Corporation (EHC) : Free Stock Analysis Report
