(PRSC) Providence Service Corp. – Momentum – Zacks Rank Buy

April 22nd, 2009

Providence Service Corp.’s (PRSC) share price has been on a serious rally for the last 4 weeks, climbing from just over $2 in early March to a recent high just shy of $10. Rising estimates and impressive quarterly results have fueled the big gain.

Company Description

The Providence Services Corp. provides and manages government sponsored social services to individuals and families in the United States. The company was founded in 1996 and has a market cap of $115 million.

Fourth-Quarter Results

Shares of PRSC received a nice boost from the company’s solid fourth-quarter results, reported on Mar 13. Revenue was up 80% from last year to $178 million. When excluding certain one-time items, earnings came in at 55 cents per share, blowing past the consensus estimate of 6 cents.

Estimates Jump

After the solid quarter, analysts upgraded their earnings projections, with the current-year climbing 14 cents to 88 cents per share. The next-year estimate increased 9 cents to $1.05, a bullish 20% earnings growth projection.

Valuations

Based upon the current-year estimate, this stock has a P/E multiple of 10.25X, a discount to the overall market.

The Chart

As previously mentioned, shares of PRSC have been rallying since early March along a very smooth trend line. Providence is set to report its first-quarter results on May 7. Take a look at the chart below.

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