Strength Seen in Select Medical (SEM): Can Its 11.3% Jump Turn into More Strength?
Select Medical (SEM) shares ended the last trading session 11.3% higher at $26.15. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 0.9% gain over the past four weeks.
Select Medical’s rally can be attributed to investors’ confidence resulting from its decision to spin-off Concentra Group Holdings Parent, LLC on Jan 3, 2024. This transaction is expected to close in late 2024, pending fulfillment of customary conditions. After a successful spin-off, two independent and publicly traded companies will be created, with each focusing its resources on set priorities, hence boosting shareholders’ value.
Moreover, Concentra is expected to pursue financial transactions, the proceeds from which will be used to pay inter-company debt or SEM’s debt. This further led to optimism in the investors’ community as SEM’s debt burden will reduce to some extent and improve its leverage and interest coverage ratios.
This hospital and rehabilitation center operator is expected to post quarterly earnings of $0.33 per share in its upcoming report, which represents a year-over-year change of +50%. Revenues are expected to be $1.65 billion, up 4.1% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Select Medical, the consensus EPS estimate for the quarter has been revised 0.8% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on SEM going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Select Medical is a member of the Zacks Medical - HMOs industry. One other stock in the same industry, Molina (MOH), finished the last trading session 0.6% higher at $378.74. MOH has returned 3.8% over the past month.
Molina's consensus EPS estimate for the upcoming report has changed +0.7% over the past month to $4.31. Compared to the company's year-ago EPS, this represents a change of +5.1%. Molina currently boasts a Zacks Rank of #3 (Hold).
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Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
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