A month has gone by since the last earnings report for Ensign Group (ENSG). Shares have added about 22.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ensign Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Ensign Group's Q1 Earnings Beat, Revenues Rise Y/Y
The Ensign Group delivered adjusted operating earnings of 77 cents per share in first-quarter 2020, surpassing the Zacks Consensus Estimate by 24.2%. Further, the bottom line improved 92.5% year over year.
The company’s results benefited from improved revenues. However, the results were partially offset by onset of the COVID-19 pandemic in the second half of March, which adversely impacted its occupancies and skilled mix to some extent.
Total revenues of $590 million increased 25.1% year over year in the reported quarter. This improvement was driven by solid segmental performance at Transitional and Skilled Services. Moreover, the top line beat the Zacks Consensus Estimate by 1.9%.
Further, adjusted net income in the quarter under review was $43 million, up 93.3% from the prior-year quarter.
Total revenues in the Transitional and Skilled Services, the only reporting segment of the company, came in at $558.4 million, up 24.3% year over year. Notably, the segment accounted for 94.7% of the total revenues in the reported quarter.
Revenues from “All Other” category improved 41.5% year over year to $31.2 million, reflecting 5.3% of total revenues.
However, total expenses increased 20.7% year over year to $532.8 million due to higher cost of services, depreciation and amortization plus general and administrative expenses.
The company exited the first quarter with $63.2 million of cash and cash equivalents, up 6.8% from the level at 2019 end.
As of Mar 31, 2020, long-term debt less current maturities was $344.6 million, up 5.9% from the level at 2019 end.
For first-quarter 2020, net cash by operating activities stands at $27.1 million, up 72.2% year over year.
Ensign Group paid out a quarterly cash dividend of 5 cents per share during the first quarter.
2020 Outlook Intact
Despite the COVID-19 pandemic-induced economic turmoil, Ensign Group retained guidance for 2020.
Management still expects annual earnings between $2.50 and $2.58 per share and annual revenues in the range of $2.42-$2.45 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -7.89% due to these changes.
Currently, Ensign Group has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Ensign Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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