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Here's Why You Should Invest in Chemed (CHE) Stock Right Now

Zacks Equity Research

Chemed Corporation CHE has been gaining investors’ confidence on consistently positive results. Over the past year, the company’s shares have outperformed its industry. The stock has gained 39.4% against a 21.6% decline of the industry. Also, the company has outperformed the S&P 500’s 1.1% growth during the same period.

The renowned hospice care provider has a market cap of $6.96 billion. The company’s five-year projected growth rate looks impressive at 10.8%. It is expected to scale new highs in the near term. The company has average positive earnings surprise of 4.8% for the trailing four quarters.

Per our Style Score, Chemed has Growth Score of B, which is reflective of its solid prospects. Our research shows that stocks with a Growth Style Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy), offer the best upside potential.

 


 

With solid prospects, the Zacks Rank #1 company is a worthy investment choice right now.

What Makes the Stock an Attractive Pick?

Robust Segmental Growth: We are upbeat about the company’s performance, which once again exhibited robust growth within its core operational metrics for VITAS and Roto-Rooter arms in the second quarter of 2019 on strong domestic sales. The company anticipates sustaining this positive momentum on continued expansion of its plumbing and drain cleaning service segments. Chemed also experienced robust growth in the water restoration service in the second quarter of 2019.

Acquisitions and Partnerships to Add Value: We are looking forward to the company’s recently-formed alliance with HSW RR, Inc.’s (“HSW”) franchise operations and Western Drain Supply. The partnership will likely boost productivity, market share and profitability of Chemed.

In another development, the acquisitions of the franchise territory, serving Alameda County, and portions of southwestern San Joaquin County, CA, are also likely to aid the company. This is because these acquisitions are immediately accretive and will not need months of re-engineering and infrastructure realignment to make them functional, thereby saving costs.

Raised Guidance Buoys Optimism: Banking on strong second-quarter performance, Chemed recently raised its 2019 adjusted earnings per share guidance to $13.65-$13.85, above $11.93 reported in the last financial year. The Zacks Consensus Estimate for earnings of $13.76 remains within the company’s projected range. This indicates that Chemed will likely be able to maintain the ongoing bullish momentum for the rest of the year.

Which Way Are Estimates Heading?

The estimate revision trend of the company for 2019 is impressive. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved up 7.8% to $13.76.

The Zacks Consensus Estimate for its 2019 revenues is pegged at $1.94 billion, suggesting an 8.9% increase from the year-ago reported number.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Baxter International Inc. BAX, GW Pharmaceuticals plc GWPH and LeMaitre Vascular, Inc. LMAT.

Baxter’s long-term earnings growth rate is estimated at 12.8%. The stock carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

GW Pharmaceuticals, with a Zacks Rank #1, has an estimated earnings growth rate of 72.8% for the third quarter of 2019.

LeMaitre Vascular’s long-term earnings growth rate is projected at 10%. The stock currently sports a Zacks Rank of 1.

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Baxter International Inc. (BAX) : Free Stock Analysis Report
 
GW Pharmaceuticals PLC (GWPH) : Free Stock Analysis Report
 
LeMaitre Vascular, Inc. (LMAT) : Free Stock Analysis Report
 
Chemed Corporation (CHE) : Free Stock Analysis Report
 
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