Almost Family Reports Healthy Quarter

by: Zacks.com November 13, 2008 | about stocks: AFAM    

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Almost Family Inc. (AFAM) has gone on to set a new 52-week high after a spectacular third-quarter earnings announcement.

Company Description

Almost Family operates healthcare centers for adults who would normally be placed into a nursing home. The facilities offer independence for seniors who require frequent medical and therapeutic care. Round-trip transportation is also available for any quest.

Almost Family also offers home health care options for patients, typically recovering from an extended hospital visit. The segment offers everything from meal preparation and home upkeep to medical care and respite. The company is headquartered in Louisville, Kentucky, has almost 5,000 employees, and a market cap of $329 million.

A Healthy Quarter

On Nov 5 Almost Family reported third quarter earnings per share of 57 cents. Earnings were up 68% year-over-year and 12 cents higher than analysts expectations. The 27% surprise was the fourth surprise in the past 4 earnings releases, averaging 23%.

Earnings were driven by an 84% increase in revenues, $58.7 million up from $32 million one year ago.

Estimates Continue to Rise

The consensus estimate for 2008 is not $2.00, up from $1.89 just before the earnings report. Analyst estimates for 2009 currently average $2.40, up 14 cents in the past week.

Given these forecasts, the growth rate for full-year 2008 is 43%, while 2009 is 20%. Almost Family's long-term growth rate is 25%, yielding a PEG ration of 1.0.

Featured In Forbes

On Oct 8th Almost Family was recognized by Forbes in its list of the 200 Best Small Companies in America. The company ranked 24th on the list that rated stocks based on 1-year and 5-year growth. Last year, Almost Family ranked 77th on the list.

The Chart

Shares of AFAM have had a fantastic year. The stock recently posted its lasted 52-week high of $53.85 just after the third quarter earnings release. Take a look at the chart below.

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This article has 5 comments:

  •  
    Nov 13 07:50 AM
    Take a look at the cash flow statement. Free cash flow is negative, with a huge increase in working capital, indicating the company is stretching to show earnings. And the stock trades at 25x EPS in this market. It's a $30 stock at best.
    Reply | Link to Comment
  •  
    Nov 13 12:32 PM
    I subscribe to Zacks and they have a mixed record on stock picks. They need to get more gutsy with their calls! nice work on AFAM, false profit.
    Reply | Link to Comment
  •  
    Nov 13 12:42 PM
    In the cash flow statement, an increase in an asset(accounts receivable in this case) is considered a "use of cash". So increased sales on credit, reduces cash flow...those wacky accounting rules!!! Cash flow is also negative because of the acquisition of PatientCare, which had $47 million in sales for $45 million. Less than 1x sales...not bad. Overall, I don't see any major concerns as long as their accounts receivable ends up being good.


    On Nov 13 07:50 AM False Profit wrote:

    > Take a look at the cash flow statement. Free cash flow is negative,
    > with a huge increase in working capital, indicating the company is
    > stretching to show earnings. And the stock trades at 25x EPS in this
    > market. It's a $30 stock at best.
    Reply | Link to Comment
  •  
    Nov 13 01:36 PM
    Having read the above comments, I will acknowledge I am not one to pore over cash flow statements, nor am I an expert on accounting rules. I believe this stock could easily be $30 tomorrow, or $50 tomorrow, but one fact I can point out is that it has traded up more than +122% since my first analysis on it in early June.
    Reply | Link to Comment
  •  
    Nov 17 10:08 AM
    nice call on the stock overall - I think the previous poster was simply trying to show that receivables may be growing too fast. That is wat he meant that they may be dressing up the income stmt, ie. - sales may look better than they would under "normal" conditions.

    how you define normal is worth debating and I'll take a closer look at how the peer group matches up on a revs/recievables growth basis
    Reply | Link to Comment
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