With the Baby Boomers aging, demand for home health and assisted living care is growing. The Ensign Group, Inc. (ENSG) saw occupancy of its care facilities grow to a record in 2010 as it focused on quality of care for current residents and their families. This Zacks #1 Rank (strong buy) is trading at 13.9x forward estimates.
The Ensign Group operates 85 care facilities in the western states of California, Arizona, Texas, Washington, Utah, Idaho and Colorado.
The facilities provide a wide range of care including assisted and independent living, home health and hospice, and physical, occupational and speech therapies.
Record Results for Q4 and 2010
On Feb 16, The Ensign Group reported its fourth quarter results and surprised on the Zacks Consensus Estimate by 19.6%. Earnings per share were 55 cents compared to the consensus of 46 cents. The company made just 41 cents in the year ago quarter.
Same-store occupancy rose 194 basis points to 83.7% for the quarter and 137 basis points to a record 83.1% for the year.
Revenue rose 17.8% to $172.8 million in the fourth quarter. It was also up 19.8% to a new record of $649.5 million for the full year.
The company added 8 new facilities, all purchased with cash, and 1 home health business during 2010 and has already added 2 continuing care retirement campuses in the first quarter of 2011.
The Ensign Group has cash on hand in which to expand, with $72.1 million as of the end of Dec 2010.
2011 Outlook
Growth is expected to continue in 2011 with revenue projected to be in the range of $740 million to $756 million, well above the $649.5 million obtained in 2010.
Earnings per share are expected between $2.15 and $2.25 per share. Again, this is significantly above the 2010 earnings of $1.92 per share. The company made just $1.55 in 2009.
Zacks Consensus Estimates Rise
Given the bullish guidance and earnings surprise, analysts have been raising full year estimates.
The 2011 Zacks Consensus Estimate jumped to $2.24 from $2.01 with 5 estimates revised higher in the last 30 days. This is at the high end of the company’s guidance range and assumes earnings growth of 16%.
The 2012 Zacks Consensus has also moved higher over the past month, climbing to $2.43 from $2.23 per share in that time.
You can see the consensus estimates moving consistently higher over the past few years in the price and consensus chart below.
ENSG Is a Value Stock
In addition to an attractive P/E ratio, The Ensign Group has a price-to-book ratio just under the cut-off for a “value” stock at 2.9. A P/B ratio under 3.0 is what I use to designate “value.”
The company has a stellar return on equity (ROE) of 19.3%.
It also rewards shareholders with a dividend currently yielding 0.70%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
ENSIGN GROUP (ENSG): Free Stock Analysis Report
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