Hanger Orthopedic Group Inc. (HGR) has been posting steady gains since its stock price bottomed out in late April. The company is fresh off the heels of a great second quarter, and analysts have been boosting their earnings estimates in anticipation of robust earnings.

Hanger Orthopedic Group Inc. owns and operates orthotic and prosthetic patient-care centers in the United States. The company has a market cap. of $435 million and is headquartered in Bethesda, Maryland.

A Great Quarter

Shares of HGR have been on a nice rally over the last two weeks, assisted by the company’s excellent second-quarter results, reported on July 29. Sales were up 13% from the same period last year to $181.2 million. Net income jumped ahead 57.2% from last year to $8.0 million. This produced earnings of 25 cents per share, well ahead of analyst estimates of 20 cents per share.

Consistent Results

This is the fourth time in four quarters that Hanger has either beaten or matched analyst estimates, having done so by an average of 3 cents, or 20%.

Hanger reported strong growth from both if its primary segments, with the company’s largest segment in patient care posting a 6.7% increase in same-center sales. Hanger’s distribution segment, smaller by sales volume, posted a 23.5% increase in sales.

Earnings Guidance

After the solid quarter, Hanger confirmed its previous guidance for the rest of the fiscal year, but proceeded to boost its full-year revenue guidance to a range between $680 million and $690 million. Hanger also raised its earnings target to between 80 and 82 cents per share. Analysts have the next-year estimate pegged at 94 cents per share, a 13% earnings growth projection.

Valuations

Based upon the current-year earnings estimate, this is not a cheap stock, trading with a forward P/E multiple of 22X, a sharp premium to the overall market.

The Chart

Shares of HGR have been rallying since finding a bottom below $11 in late April. Since then this stock has advanced beyond the $18.50 mark, establishing a new 52-week and all-time high in the process.

Content Courtesy: Zacks Investment Research

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