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The Ensign Group, Inc. ENSG is benefiting from strategic acquisitions, an expanding footprint, rising service revenues and a strong financial position. An optimistic 2024 business outlook also reinforces investors’ confidence in the stock.
Zacks Rank & Price Performance
Ensign Group carries a Zacks Rank #2 (Buy) at present.
The stock has gained 11.5% in the past six months compared with the industry’s 2.9% growth. The Medical sector and the S&P 500 Composite have declined 9.7% and increased 10.3%, respectively, in the same time frame.
ENSG's 6-Month Price Performance
Image Source: Zacks Investment Research
Rising Estimates
The Zacks Consensus Estimate for Ensign Group’s 2024 earnings is pegged at $5.49 per share, indicating an improvement of 15.1% from the year-earlier reading, while the same for revenues is $4.3 billion, implying a 14% increase from the prior-year actual.
The consensus mark for 2025 earnings is pegged at $6.07 per share, indicating 10.7% growth from the 2024 estimate. The same for revenues stands at $4.7 billion, which indicates a rise of 11% from the 2024 estimate.
ENSG’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 1.3%.
Key Drivers
Ensign Group's revenue growth is primarily fueled by rising service revenues from its advanced healthcare offerings at skilled nursing, rehabilitation, and senior living facilities. The aging U.S. population is expected to sustain the robust demand for ENSG's senior living services. Additionally, the growing need for effective rehabilitation services, which assist individuals in resuming daily activities, is projected to drive revenue growth in the company's Skilled Services segment.
ENSG anticipates revenues within the range of $4.25-$4.26 billion in 2024, the midpoint of which indicates 14.1% growth from the 2023 reported figure. Adjusted earnings per share are estimated to lie between $5.46 and $5.52 this year. The midpoint of the outlook indicates 15.1% growth from the 2023 reported figure.
The strong performance of Ensign Group's Standard Bearer segment further boosts revenue. Through the Standard Bearer unit, the company generates rental income by leasing post-acute care properties, which it owns, to healthcare operators under triple-net lease agreements. These arrangements benefit Ensign Group by not only providing rental revenues but also shifting property-related expenses to the tenants.
Ensign Group’s growth strategy, which is focused on acquisitions, is noteworthy. The company actively acquires facilities in various U.S. regions, fostering collaborations with local caregiving teams. This localized approach enables Ensign Group to understand regional healthcare needs better and deliver high-quality services to underserved communities.