Why Is Ensign Group (ENSG) Down 13.8% Since Last Earnings Report?

A month has gone by since the last earnings report for Ensign Group (ENSG). Shares have lost about 13.8% 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 Beat Estimates, Rise Y/Y

Ensign Group delivered adjusted operating earnings of 60 cents per share in fourth-quarter 2019, beating the Zacks Consensus Estimate by 9.1%. Also, the metric improved 11.1% year over year on higher revenues.

Moreover, adjusted net income in the quarter under review was $27.4 million, up 3.9% from the prior-year quarter.

Operational Update

Total revenues of $560 million increased 21.1% year over year in the reported quarter. Moreover, the metric beat the Zacks Consensus Estimate by 2.9%.

Total expenses escalated 18.7% year over year to $520 million due to higher cost of services, rent, general and administrative expenses plus depreciation and amortization.

Interest expense of the company rose 11.8% year over year.

Financial Update

The company exited 2019 with $59 million of cash and cash equivalents, up 90.6% from the level at 2018 end.

As of Dec 31, 2019, long-term debt less current maturities was $325 million, up 39.5% from the level at 2018 end.

For 2019, net cash from operating activities stands at $168.9 million, down 0.7% year over year.

Dividend Update

Ensign Group paid out a quarterly cash dividend of 5 cents per share during the fourth quarter. The company has been hiking its dividend for the 17 consecutive years.

2020 Outlook

Following solid fourth-quarter earnings, management again raised its 2020 guidance.

For the full year, earnings per share are expected between $2.50 and 2.58 on revenues within $2.42-$2.45 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 9.74% due to these changes.

VGM Scores

At this time, Ensign Group has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision 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.