Chemed Gains Ground on Solid VITAS & Roto-Rooter Businesses

An image of a quarterly report on a screen
Credit: Shutterstock photo

On Feb 27, we issued an updated research report on Chemed CorporationCHE . This Zacks Rank #1 (Strong Buy) stock currently operates two wholly-owned subsidiaries - VITAS Healthcare and Roto-Rooter. Over the past few quarters, VITAS has been registering solid admissions and expanded average daily census. Meanwhile, the Roto-Rooter business is seeing growth on strong performance by the core plumbing and drain cleaning service segments as well as solid improvement in water restoration.

In the past six months, Chemed has consistently outperformed the S&P 500 market. The stock has gained 3.2% versus the market's 3.5% decline.

Chemed exited 2018 on a promising note. The company registered strong year-over-year growth in earnings and revenues. Notably, the company witnessed solid revenue growth across its key subsidiaries.

Chemed has seen strong performance in the VITAS business over the past few quarters. During fourth-quarter 2018, VITAS admissions generated from hospitals rose 2% and made up 50% of total admissions. Also, home-based admissions rose 2.5%. For 2019, the company projects VITAS Healthcare revenue growth (prior to Medicare Cap) within 5.5-6%.

Also, we are upbeat about Roto-Rooter which is currently the nation's leading provider of plumbing and drain cleaning services. Through its network of company-owned branches, independent contractors and franchises, Roto-Rooter offers plumbing and drain cleaning services to more than 90% of the U.S. population. During fourth-quarter 2018, Roto-Rooter reported 10.6% growth year over year.

We are currently looking forward to Roto-Rooter's recently-made acquisitions of certain franchises in California. According to the company, it has acquired five formerly independent Roto-Rooter franchises covering several areas of Northern California. This is its largest franchise acquisition to date, with annual sales of $22 million.

Chemed's capital deployment policy is based on suitable acquisitions and solid return of cash to shareholders through dividends and buybacks.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Penumbra, Inc. PEN , Wright Medical Group N.V. WMGI and DexCom, Inc. DXCM . Notably, each of these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Penumbra's long-term earnings growth rate is expected at 20%.

Wright Medical's long-term earnings growth rate is expected at 11%.

DexCom's second-quarter earnings per share are projected to grow 160%.

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, "4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future."

Click to get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Penumbra, Inc. (PEN): Free Stock Analysis Report

DexCom, Inc. (DXCM): Free Stock Analysis Report

Wright Medical Group N.V. (WMGI): Free Stock Analysis Report

Chemed Corporation (CHE): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More