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Here's Why You Should Retain Acadia Healthcare (ACHC) Stock

·4 min read

Acadia Healthcare Company, Inc. ACHC has been benefiting from growing revenues and several growth-related initiatives, which is leading to facility expansions. A strong financial standing also reinforces growth prospects of the stock.

Zacks Rank & Price Performance

Presently, Acadia Healthcare carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has soared 124% over a year compared with the industry’s growth of 92.7%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Style Score

The company is well-poised for progress, as evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

It has an impressive Growth Score of A, which reinstates the growth prospects of a company.

Impressive Earnings Surprise History

Acadia Healthcare boasts an impressive earnings surprise record. It has surpassed estimates in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 33.49%, on average.

Positive Estimate Revision

The Zacks Consensus Estimate for 2021 earnings has been revised upward by 3.8% in the past 30 days.

Solid 2021 Guidance

Following first-quarter 2021 results, the healthcare provider raised its 2021 business outlook. Revenues are now anticipated in the range of $2.24-$2.29 billion, up from the prior guidance of $2.23-$2.28 billion. The mid-point of the newly-provided guidance suggests 8.4% growth from the 2020 reported figure. Also, the same is in line with the Zacks Consensus Estimate of $2.27 billion.

Adjusted earnings per diluted share is projected within $2.30-$2.55, higher than the previous guidance of $2.20-$2.45. However, the mid-point of the revised guidance indicates decline of 12.8% from 2020-end reported figure. Also, the same is pegged lower than the Zacks Consensus Estimate of $2.44 per share.

Among other medical sector players, HCA Healthcare, Inc. HCA, Community Health Systems, Inc. CYH and Tenet Healthcare Corporation THC raised their earnings guidance for 2021.

Business Tailwinds

Revenues at Acadia Healthcare have been benefiting from a well-performing U.S. business. The business is being driven by robust volumes and efficient cost-management initiatives. Further, demand for the company’s services for mental health and substance use treatment is likely to continue witnessing an uptick amid the gradual recovery of the economy from the COVID-19 pandemic.

The company keeps on pursuing acquisitions and joint ventures (JVs) with renowned healthcare systems. This has enabled it to inaugurate new hospitals or add beds to its existing facilities. There are several growth-related initiatives lined up in its pipeline, which the company will pursue over the next few years. This year, the company plans to add around 300 beds to existing U.S. facilities. The next year is expected to be the strongest year in relation to JVs.

Moreover, Acadia Healthcare boasts of a solid cash balance and has $422 million available under its $600-million revolving credit facility as of Mar 31, 2021. The company’s solid cash generation abilities have backed it to pursue several growth-related efforts. Its leverage ratio has been improving, which came in at 39.4x at first-quarter end. The figure remains lower than 2020-end and the industry’s figures of 62.2x and 90x, respectively.

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Community Health Systems, Inc. (CYH) : Free Stock Analysis Report

Tenet Healthcare Corporation (THC) : Free Stock Analysis Report

HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report

Acadia Healthcare Company, Inc. (ACHC) : Free Stock Analysis Report

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