The COVID-19 pandemic has proved to be a huge setback for many industries. But it has been particularly devastating for the senior-living industry. The industry has been under pressure for some time due to labor shortages, rising inflation, and supply shortages.
However, quality senior-living companies are expected to withstand these short-term pressures through new investments, innovations, and partnerships. With the pandemic entering its third year, the fortunes of the senior-living industry have finally started to look up in part because 65% of the U.S. population is now fully vaccinated. With a third or booster shot being administered, the chances of severe illness from the virus is falling drastically, thereby making senior living places safe again to live and work. Furthermore, the demand for senior-living communities is rising rapidly due to the nation’s aging population.
Given this backdrop, we think it could be wise to add quality senior-living stocks, The Ensign Group, Inc. (ENSG) and National HealthCare Corporation (NHC), to one’s portfolio. These stocks are fundamentally strong and are well-positioned to serve the nation’s rapidly aging population.
The Ensign Group, Inc. (ENSG)
ENSG in Mission Viejo, Calif., provides skilled nursing, senior living, and rehabilitative services. The company provides a range of skilled nursing and senior living services, physical, occupational, speech therapies, and other rehabilitative and healthcare services. Its segments include skilled services and real estate.
On Feb. 2, 2022, ENSG announced that it had acquired two nursing facilities: Arrowhead Springs Healthcare and Desert Mountain Care Center. ENSG’s CEO Barry Port said, “We are very excited to add these facilities to our California operations, which will strengthen our local clusters and further our ability to provide top-notch care to the patients we serve. We are also thrilled to continue to add to our ever-growing real estate portfolio.”
ENSG’s revenues increased 11.5% year-over-year to $668.53 million for the third quarter, ended Sept. 30, 2021. The company’s non-GAAP net income increased 18.5% year-over-year to $51.75 million. Also, its non-GAAP EPS came in at $0.91, representing a 16.6% increase year-over-year.
Analysts expect ENSG’s EPS for the quarter ending December 31, 2021, to increase 20% year-over-year to $0.96. Its revenue for the quarter ending March 31, 2022, is expected to increase 12% year-over-year to $702.25 million. It surpassed the Street’s EPS estimates in each of the trailing four quarters. And over the past year, the stock has declined 15.3% in price to close the last trading session at $70.96.
ENSG’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall B rating, translating to a Buy. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Stability and Quality. It is ranked #18 out of 88 stocks in the Medical – Services industry. Click here to see the other ratings of ENSG for Growth, Value, Momentum, and Sentiment.
Click here to checkout our Healthcare Sector Report for 2022
National HealthCare Corporation (NHC)
NHC operates skilled nursing facilities, assisted living facilities, independent living facilities, and home care programs. The Murfreesboro, Tenn., company is engaged in the post-acute healthcare industry segment. Its business activities include providing sub-acute and post-acute skilled nursing care, immediate nursing care, rehabilitative care, senior living services, and others.
For its fiscal third quarter, ended Sept. 30, 2021, NHC’s net operating revenues and grant income increased 10.4% year-over-year to $276.73 million. The company’s income from operations increased 81.7% year-over-year to $12.76 million. Also, its non-GAAP net income increased 10.4% year-over-year to $14.88 million. In addition, its non-GAAP EPS came in at $0.96, representing a 9% increase year-over-year.
Over the past year, the stock has declined 1.2% in price to close the last trading session at $62.94.
NHC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has an A grade for Stability and a B grade for Value and Sentiment. It is ranked #14 in the Medical – Services industry. To see the other ratings of NHC for Growth, Momentum, and Quality, click here.
Click here to checkout our Healthcare Sector Report for 2022
ENSG shares were trading at $73.35 per share on Tuesday morning, up $2.39 (+3.37%). Year-to-date, ENSG has declined -12.64%, versus a -5.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
2 Senior-Living Stocks to Buy Right Now StockNews.com
