Addus HomeCare Corporation
) delivered an 11.8% earnings surprise in the third quarter,
marking its third beat in the past four quarters. Earnings
estimates for this provider of residence-based medical and social
services for the elderly have been on the rise since the report,
helping it become a Zacks #1 Rank (Strong Buy) on January 3, 2013.
With an impressive valuation, including a price-to-book (P/B)
multiple of just 0.9 and a price-to-sales (P/S) ratio as low as
0.3, this stock offers a promising proposition for value investors.
Good Third Quarter
On November 1, Addus HomeCare reported third-quarter adjusted
earnings per share of 19 cents, beating both the Zacks Consensus
Estimate and the year-ago earnings by 11.8%. Net income (prior to
severance expense of $0.3 million) was $2.0 million, compared with
$1.8 million last year (before adjustment for $16.0 million for
intangible assets and goodwill impairment charge).
Company-wide net service revenues moved up 2.3% year over year to
$71.0 million, beating the Zacks Consensus Estimate by about 1%.
Revenues from the Home & Community segment were up 6.1% to
$59.6 million, while revenues for the Home Health segment were down
13.6% to $11.4 million.
Operating income for the Home & Community segment (excluding
head office expenses but including amortization and depreciation
charges) stood at 12.6% of sales in the reported quarter, versus
12.1% in the year-ago quarter. The enhancement in margin came on
account of cost control, reduced bad debt and other factors.
Adjusted operating margin for the Home Health segment was 1.8%,
compared with 1.4% a year ago.
Earnings Estimates Inch Up
The Zacks Consensus Estimate for 2012 increased 1.8% in the last
three months to 58 cents. For 2013, the Zacks Consensus Estimate
moved up 1.5% over the same timeframe to 69 cents, reflecting a
year-over-year improvement of 19.0%.
Though shares have approximately doubled over the past year, they
remain a good buy. In addition to low P/B and P/S multiples, the
stock is currently trading at a forward P/E multiple of 10.6. Going
by the usual indicators of a P/E multiple below 15.0, a P/B ratio
under 3.0 and a P/S ratio lower than 1.0 for a value stock; Addus
appears to be undervalued.
The PEG ratio for the stock is 0.71, based on a 3- to 5- year
earnings per share growth rate of 15%. This metric is at a 29%
discount to the generally accepted yardstick of 1.0 for a fairly
Addus HomeCare Corporation is a provider of health care services in
the residential setting. Addus caters to the needs of older
citizens and those who may be dually eligible. By providing a range
of home-based care, the company's services permit people to stay at
home longer. Addus has a market capitalization of about $79.3
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ADDUS HOMECARE (ADUS): Free Stock Analysis
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