A month has gone by since the last earnings report for Ensign Group (ENSG). Shares have lost about 1.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ensign Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ensign Group’s Q4 Earnings Top Estimates, Surge Y/Y
The Ensign Group delivered adjusted operating earnings of 52 cents per share, beating the Zacks Consensus Estimate by 10.6%. Moreover, the metric soared 53% year over year. The upside is mainly driven by segmental performances.
Net income for the quarter under review was $26 million, up 135.3% year over year.
Total revenues of $538 million increased 10.2% year over year in the reported quarter and also beat the Zacks Consensus Estimate by 2.3%. This upside was backed by solid segmental performances.
Total Transitional and Skilled Services segment income was $55.2 million for the quarter under consideration, up 38.2% from the prior-year period.
Total Assisted and Independent Living Services segment’s revenues were up 12.9% year over year to $40.5 million.
Segmental revenues at Total Home Health and Hospice Services were up 11.3% to $44.2 million.
Total expenses rose 9% year over year to $503 million due to higher cost of services plus general and administrative expenses.
Quarterly Segment Update
Transitional and Skilled Services
This segment generated revenues of $441.7 million, up 9.4% year over year. Notably, the segment accounted for 82.1% of total revenues in the reported quarter.
Assisted and Independent Living Services
This segment generated operating revenues of $40.5 million, up 12.9% year over year with the segment contributing 7.5% to the company’s top line.
Home Health & Hospice Services
For this segment, total operating revenues were $44 billion, up 11.4% year over year. The same represented 8.2% to the total revenues.
This segment delivered revenues of $11.4 million, surging 32% from the prior-year quarter. This segment reflected 2.2% of the total revenue base.
Total cash and cash equivalents declined 25% to $31 million from the year-end 2017 level.
As of Dec 31, 2018, long-term debt less current maturities was $233 million, down 23% from the level at 2017 end.
Cash from operations in the first nine months of 2018 was $210 million, up 188% year over year.
Ensign Group paid a quarterly cash dividend of 4.8 cents per share during the fourth quarter. The company has been hiking its dividend for the last 16 years.
Management now expects earnings in the range of $2.17-$2.26 per share, lower than the Zacks Consensus Estimate of $2.35. It also anticipates annual revenues between $2.29 billion and $2.35 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 9.42% due to these changes.
At this time, Ensign Group has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ensign Group has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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