Ensign Group (ENSG) Sanctions 4% Quarterly Dividend Hike
The Ensign Group, Inc.'s ENSG board of directors recently approved a 4.3% hike in its quarterly cash dividend, in a bid to boost shareholders' value. The increased dividend is 6 cents per share compared with the previous payout of 5.75 cents. It will be paid out on or before Jan 31, 2024, to shareholders of record as of Dec 31, 2023.
The present move sustains the solid record of the healthcare service provider's increasing dividends for straight 21 years. Based on the stock’s Dec 15, closing price of $111.48, its dividend yield is 0.21%, higher than the industry's average of 0.17%.
Apart from resorting to annual dividend hikes, Ensign Group has a $20-million share buyback program in place, which was authorized this August. However, it has not made any repurchases under this program, which will run for around a year from Sep 1, 2023, in the September quarter. Last year, management approved two buyback programs worth $20 million each, out of which one was fully utilized in the previous year. The second one was not put to use and hence, expired on Aug 2, 2023.
Acquisitions of healthcare facilities remain the top priority for management in allocating capital. In the first nine months of 2023, ENSG paid dividends of $9.6 million to its stockholders. With regular dividend payments, staying away from share repurchases temporarily may not be a concern for investors.
Robust cash flows prompt Ensign Group to pursue uninterrupted dividend hikes. It generated operating cash flows of $291.4 million in the first nine months of 2023, which climbed 31.1% from the year-ago quarter's level. An expanding cash balance also bears testament to ENSG’s financial strength. In addition to this, a revolving credit facility also serves the purpose of financing its buyouts.
Return on equity was 19.4% as of Sep 30, 2023, which compares favorably with the industry’s negative figure of 8.5%. This indicates that the healthcare services provider is performing well in terms of generating returns to its shareholders relative to the industry peers.
Attributable to a strong financial stand, Ensign Group's impressive inorganic growth strategy in the form of multiple buyouts pursued throughout the year expands its healthcare portfolio as well as bolsters its nationwide presence.
A highly fragmented skilled nursing industry with the presence of several local providers offers significant acquisition and consolidation opportunities to the industry participants. The current healthcare portfolio of ENSG comprises of 297 facilities spread across 13 U.S. states. It also owns 113 real-estate assets.
Shares of Ensign Group have risen 17.9% in the past six months compared with the industry’s 3.9% growth. ENSG currently carries a Zacks Rank #3 (Hold).
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Stocks to Consider
Some better-ranked stocks in the Medical space are DaVita Inc. DVA, Centene Corporation CNC and Enovis Corporation ENOV. While DaVita sports a Zacks Rank #1 (Strong Buy) at present, Centene and Enovis carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. The Zacks Consensus Estimate for DVA’s 2023 earnings implies an improvement of 22.3% from the year-ago reported figure. The consensus mark for revenues indicates growth of 3.3% year over year and the same for 2023 earnings has moved north 2.4% in the past 30 days.
Centene's bottom line outpaced estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 5.62%. The Zacks Consensus Estimate for CNC’s 2023 earnings indicates an improvement of 15.2% from the prior-year reported figure. The consensus mark for revenues indicates growth of 4.4% from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north 0.3% in the past 30 days.
Enovis’ earnings outpaced estimates in each of the trailing four quarters, the average surprise being 11.01%. The Zacks Consensus Estimate for ENOV's 2023 earnings implies an improvement of 4.9% from the year-ago reported figure. The consensus mark for ENOV's 2023 earnings has moved north 5.3% in the past 60 days.
Shares of DaVita and Centene have risen 8.3% and 13%, respectively, in the past six months. However, Enovis' shares have lost 10.9% in the same time frame.
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