Providence Service Corp (PRSC) raised guidance recently, which has made the valuations even more attractive.
Company Description
Providence provides home and community social services related to government programs like welfare, juvenile justice, Medicaid and corrections.
Raising Guidance
On Sep 21 Providence raised its third-quarter and full-year guidance. The company said it continues to see Medicaid eligibility and referrals.
While third-quarter revenue is expected to be slightly higher, between $211 and $215 million from the previous guidance of $210, the earnings forecast is much higher. Earnings per share is expected to land between 20 and 22 cents, up from between 4 and 6 cents.
Analysts Follow Suit
Full-year estimates have been climbing for the past 2 months. The Zacks Consensus Estimate for 2010 is now $1.77, up from $1.40 over the past 2 months. This level is about 7% higher than the 2009 earnings.
Solid Earnings History
In early August Providence beat earnings expectations by 18 cents by reporting EPS of 54 cents. In the past 7 quarters Providence has topped forecasts 6 times and met expectations in the other period.
Good Valuations
Shares of PRSC are going for just 8 times forward estimates and with a PEG ratio of only 0.7. Additionally, the price to sales is just 0.22, making this Zacks #1 Rank (Strong Buy) even more attractive.
The Chart
The recent estimate activity should get shares enough buyers to push past the current trading range, especially given the valuations and upward trend.
Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service
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