Chemed's Roto-Rooter & VITAS Robust, Acuity Mix Shift Weak

On Jul 15, we issued an updated research report on Chemed Corporation (NYSE:CHE) . The company currently operates two wholly-owned subsidiaries, namely VITAS Healthcare and Roto-Rooter.

Over the past three months, shares of Chemed have consistently outperformed its industry. The stock has gained 9.5% compared with the industry’s 3.5% rise. Chemed exited 2018 on a promising note. The company generated strong year-over-year growth in revenues. It is optimistic to note that it witnessed a solid revenue uptick across its key subsidiaries.

VITAS has been registering an expanded average daily census. Moreover, the Roto-Rooter business has been seeing growth on the back of a solid performance by the core plumbing and drain cleaning service segments as well as a robust trend in water restoration.

Moreover, 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.

On the flip side, Chemed ended first-quarter 2019 on a dull note. Both earnings and revenues missed the respective Zacks Consensus Estimate in the reported quarter. An unfavorable acuity mix shift, fluctuations in net room and board plus contractual adjustments dented the top line during the period.

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

Zack Rank and Key Picks

Chemed currently curries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical space are Teleflex Inc. (NYSE:TFX) , Penumbra (NYSE:PEN) and NuVasive Corporation (NASDAQ:NUVA) . While Teleflex currently carries a Zacks Rank #2 (Buy), the other two sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Teleflex’s long-term earnings growth rate is expected at 13.7%.

Penumbra’s long-term earnings growth rate is projected at 21.5%.

NuVasive’s long-term earnings growth rate is expected to be 11.9%.

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