(LHCG) LHCG Group. – Aggressive Growth – Zacks Rank Buy

June 3rd, 2009

LHC Group. (LHCG) has been growing its home-based services rapidly, leading to a 49% increase in revenues. The healthcare group has a spotless earnings history.

Company Description

LHC serves Medicare beneficiaries in the southern U.S. with post-acute healthcare services. In addition to home health care the company provides hospice services through facilities as well as long-term care hospital and rehab clinics.

Another Great Quarter

LHC released first-quarter results on May 6 that included a 49% increase in net revenue to $125 million, from $84 million last year. Revenues generated through home-based services lead the way with a 60% increase to $109 million, up from $68 million.

Earnings per share beat estimates by a double-digit percentage once again. EPS was $0.62, 29% higher than the forecasted $0.48. Net income was also more than double the $0.30 earned in the same quarter last year.

Bullish Guidance, Estimates Up

After the company raised the median of its revenue guidance to $505 million, from $490, analysts began raising full-year earnings estimates. Since the report was released 9 out of 10 analysts have raised current year guidance, bringing the consensus to $2.24, up from $2.09.

The current year projection would yield earnings growth of 30%. Next year’s consensus of $2.40 would be a growth rate of 7%.

Great Valuations

Not only does the company have great growth projections, but shares are trading at a good value as well. Currently the stock is valued at 12 times trailing earnings and less than 11 times forward earnings. The PEG ration is just 0.6.

The Chart

Shares of LHGC have been quite volatile due to political risk regarding Medicare spending, however the company maintains a spotless track record when it comes to earnings. Take a look at the chart below.


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