The Ensign Group, Inc. ENSG benefits from a growing aging population, rising demand for rehabilitation services, strategic acquisitions and adequate cash generation abilities. A positive business outlook for 2025 reinforces investors’ confidence in the stock.

ENSG’s Zacks Rank & Price Performance

Ensign Group currently carries a Zacks Rank #2 (Buy).

The stock has rallied 4.4% in the past year compared with the industry’s 0.6% growth.

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Ensign Group’s Favorable Style Score

Ensign Group carries an impressive Value Score of B. Value Score helps find stocks that are undervalued. Back-tested results have shown so far that stocks with a favorable Value Score combined with a solid Zacks Rank are the best investment bets.

ENSG’s Robust Prospects

The Zacks Consensus Estimate for ENSG’s 2025 earnings is pegged at $6.24 per share, indicating growth of 13.5%, while the same for revenues is $4.9 billion, implying a rise of 14.3% from the respective year-ago figures. 

The consensus mark for 2026 earnings is $6.83 per share, indicating an improvement of 9.5%, while the same for revenues is $5.3 billion, implying a 8.6% increase from the respective 2025 estimates.

Ensign Group’s Northbound Estimate Revision

The Zacks Consensus Estimate for 2025 earnings has been revised upward 0.6% in the past seven days.

ENSG’s Impressive Earnings Surprise History

Ensign Group’s bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 1.48%.

Ensign Group’s Solid Return on Equity

The return on equity for ENSG is currently 18.8% against the industry’s negative return of 14.5%, thereby substantiating its efficiency in utilizing shareholders’ funds.

ENSG’s Strong View for 2025

Ensign Group estimates 2025 revenues to be within the range of $4.83-$4.91 billion, the midpoint of which indicates an improvement of 14.3% from the 2024 figure.  

Adjusted earnings per share are forecasted to lie between $6.16 and $6.34, the midpoint of which implies 13.8% growth from the 2024 level.

Ensign Group’s Key Business Tailwinds

Ensign Group’s revenues have grown over the past few years, primarily driven by increased service revenues. This growth stems from the company’s ability to enhance healthcare services across its skilled nursing, rehabilitation and senior living facilities.

The growing aging population in the United States is expected to sustain the strong demand for Ensign Group’s senior living services, while the pressing need for effective rehabilitation solutions—helping individuals regain independence in daily activities—continues to fuel growth in the Skilled Services segment.

Through its Standard Bearer division, Ensign Group generates rental income by leasing post-acute care properties acquired from healthcare operators under triple-net lease agreements. These arrangements are advantageous for the company, as it not only earns rental revenues but also shifts property-related expenses to the tenants.

Ensign Group’s inorganic growth strategy is noteworthy. By acquiring healthcare facilities across various U.S. regions, the company benefits from collaborating with local caregiving teams, allowing it to gain deeper insights into diverse regional healthcare needs. This approach enhances the delivery of quality healthcare services in communities with limited access to care. Management continues to prioritize acquisitions as a key component of its capital allocation strategy.

These expansion efforts have significantly strengthened Ensign Group’s healthcare portfolio, which now includes 340 healthcare operations across 17 states, with 43 dedicated to senior living. Additionally, the company owns 140 real estate properties. The recent addition to its portfolio is of the real estate and operations of a healthcare campus in Oregon, one skilled nursing facility and another senior living unit in Alaska, a skilled nursing facility in Washington and two skilled nursing facilities in Arizona. 

A strong financial position is essential for sustaining uninterrupted business investments, and Ensign Group’s sound cash reserves and adequate cash flow generation reinforce its financial stability. These factors enable the company to reward shareholders through share repurchases and dividends. In 2024, operating cash flow reached $347.2 million. 

Ensign Group’s leverage ratio has also shown consistent improvement. At the fourth -quarter end, its total debt-to-total capital was 7.3%, significantly lower than the industry average of 85.6%.

Other Stocks to Consider

Other top-ranked stocks in the Medical space are ANI Pharmaceuticals, Inc. ANIP, Pediatrix Medical Group, Inc. MD and Option Care Health, Inc. OPCH, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ANI Pharmaceuticals’ earnings surpassed estimates in each of the last four quarters, the average surprise being 17.32%. The Zacks Consensus Estimate for ANIP’s 2025 earnings indicates a rise of 21.4%, while the consensus mark for revenues implies an improvement of 24.9% from the respective year-ago actuals. The consensus mark for ANIP’s 2025 earnings has moved 13.9% north in the past seven days. 

Pediatrix Medical’s earnings beat estimates in each of the trailing four quarters, the average surprise being 19.39%. The Zacks Consensus Estimate for MD’s 2025 earnings indicates a rise of 2% from the year-ago actual. The consensus mark for MD’s 2025 earnings has moved 2% north in the past seven days.

The bottom line of Option Care outpaced estimates in each of the trailing four quarters, the average surprise being 15.91%. The Zacks Consensus Estimate for OPCH’s 2025 earnings indicates a rise of 38.2%, while the consensus mark for revenues implies an improvement of 8.3% from the respective year-ago actuals. The consensus mark for OPCH’s 2025 earnings has moved 34.9% north in the past 30 days. 

Shares of Pediatrix Medical and Option Care have gained 61.6% and 4.8%, respectively, in the past year. However, ANI Pharmaceuticals stock has lost 9.1% in the same time frame.  

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Pediatrix Medical Group, Inc. (MD) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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