Factors That Make Ensign Group (ENSG) a Lucrative Bet Now
The Ensign Group, Inc. ENSG is gaining from solid segmental contributions, multiple acquisitions of healthcare facilities and a commendable financial position. A positive business outlook for 2023 reinforces investors’ confidence in the stock.
Top Zacks Rank & Upbeat Price Performance
Ensign Group currently carries a Zacks Rank #2 (Buy).
The stock has rallied 14% in a year, compared with the industry’s 4.4% growth. The Zacks Medical sector has lost 10.3% but the S&P 500 composite has risen 2.1% in the same time frame.
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Favorable Style Score
Ensign Group carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results have shown so far that stocks with a favorable Value Score, combined with a solid Zacks Rank, are the best investment bets.
Robust Prospects
The Zacks Consensus Estimate for ENSG’s 2023 earnings is pegged at $4.70 per share, suggesting growth of 13.5%, while the same for revenues stands at $3.7 billion, implying a rise of 22.2% from the respective year-ago reported figures.
The consensus mark for 2024 earnings stands at $5.11 per share, indicating an improvement of 8.8%, while the same for revenues stands at $3.9 billion, hinting at a 5.8% increase from the respective year-ago reported numbers.
Decent Earnings Surprise History
Ensign Group’s bottom line outpaced estimates in one of the trailing four quarters, missed the mark once and matched the same on the remaining two occasions, the average surprise being 0.45%.
Solid Return on Equity
The return on equity for ENSG currently stands at 20% against the industry’s negative return of 13.3%, thereby substantiating its efficiency in utilizing shareholders’ funds.
A Strong View for 2023
Ensign Group anticipates revenues within $3.68-$3.73 billion this year, the midpoint of which suggests 22.5% growth from the 2022 figure.
Adjusted earnings per share are estimated between $4.64 and $4.77, the midpoint of which indicates an improvement of 13.8% from the 2022 level.
Key Business Tailwinds
After witnessing a CAGR of 13.9% over the past decade (2012-2022), the top line of Ensign Group improved 24.3% in the first quarter of 2023 as well. The same continues to benefit from increased service revenues. The most significant top-line contributor gets an impetus from extending diversified healthcare services to Medicaid and Medicare health plan members.
Through the Skilled Services segment, Ensign Group provides skilled nursing and senior living services, physical, occupational and speech therapies as well as other rehabilitative and healthcare services. An aging U.S. population is likely to sustain the solid demand for its senior living services while the dire need for effective rehabilitation services that empower individuals to resume daily activities is likely to provide a ground for ENSG to capitalize on.
In addition to solid contributions from the Skilled Services unit, the Standard Bearer segment performs the role of growing the real estate portfolio of Ensign Group. To this effect, the unit has entered into triple-net lease arrangements with healthcare operators for leasing ENSG-acquired post-acute care properties.
The company follows an active inorganic growth strategy mainly in the form of facility buyouts. Each buyout advances the capabilities and expands the nationwide foothold of Ensign Group. The acquisitions also pave the way for ENSG to work closely with a credible team of caregivers at each of the facilities and subsequently, gain in-depth knowledge about several U.S. communities.
Such expansion initiatives have also broadened the healthcare portfolio of Ensign Group which currently comprises 290 healthcare operations scattered across 13 states, out of which the count of senior living operations stands at 26. It also owns 108 real-estate assets.
To pursue such uninterrupted growth-related investments, a solid financial position is of utmost importance. Ensign Group boasts growing cash reserves and solid cash-generating abilities. Apart from business investments, a strong financial stand also equips ENSG to tactically deploy capital via share buybacks and dividend payments. It has been a regular dividend-paying company for more than two decades.
Ensign Group also benefits from an improving leverage ratio. Its total debt-to-total capital of 10.3% at the first-quarter end remains lower than the industry average of 81.6%.
Other Stocks to Consider
Some other top-ranked stocks in the Medical space are Amphastar Pharmaceuticals, Inc. AMPH, Lantheus Holdings, Inc. LNTH and ANI Pharmaceuticals, Inc. ANIP, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphastar Pharmaceuticals’ earnings surpassed estimates in three of the last four quarters and matched the mark once, the average surprise being 33.83%. The Zacks Consensus Estimate for AMP’s 2023 earnings indicates a rise of 20.8%, while the same for revenues suggests an improvement of 17.4% from the respective year-ago actuals. The consensus mark for AMP’s 2023 earnings has moved 17.2% north in the past 30 days.
Lantheus’ earnings beat estimates in each of the trailing four quarters, the average surprise being 25.77%. The Zacks Consensus Estimate for LNTH’s 2023 earnings indicates a rise of 32.7%, while the same for revenues suggests an improvement of 34.6% from the respective year-ago actuals. The consensus mark for LNTH’s 2023 earnings has moved 13.1% north in the past 60 days.
The bottom line of ANI Pharmaceuticals outpaced estimates in each of the trailing four quarters, the average surprise being 68.64%. The Zacks Consensus Estimate for ANIP’s 2023 earnings is pegged at $3.31 per share, which has more than doubled from the prior year. The same for revenues suggests an improvement of 27.1% from the year-ago actual. The consensus mark for ANIP’s 2023 earnings has moved 36.8% north in the past 30 days.
Shares of Amphastar Pharmaceuticals, Lantheus and ANI Pharmaceuticals have gained 21.2%, 45.6% and 50.5%, respectively, in a year.
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Amphastar Pharmaceuticals, Inc. (AMPH) : Free Stock Analysis Report
ANI Pharmaceuticals, Inc. (ANIP) : Free Stock Analysis Report
The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report
Lantheus Holdings, Inc. (LNTH) : Free Stock Analysis Report
