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Is Select Medical (SEM) Stock Flying High After Stellar Q3 Results?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Select Medical Holdings Corporation is enjoying a strong trading session, buoyed by positive sentiment from the recent announcement of a strategic acquisition in the healthcare sector, and on Friday, Select Medical Holdings Corporation’s stocks have been trading up by 12.06 percent.

Latest Developments and Key Events

  • Select Medical revised its fiscal year 2024 earnings, with an upward adjustment, enhancing its revenue and adjusted EBITDA expectations significantly.

Candlestick Chart

Live Update at 16:03:32 EST: On Friday, November 01, 2024 Select Medical Holdings Corporation stock [NYSE: SEM] is trending up by 12.06%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • The company surpassed analyst predictions by posting better-than-expected Q3 earnings and revenue, thanks to strong operational performance.

  • Select Medical announced a joint venture with SSM Health to open a rehabilitation hospital in Oklahoma City, integrating existing facilities and aiming for a December 2024 launch.

  • There was a noteworthy increase in the company’s revenue, net income, and adjusted EBITDA for Q3, alongside the approval of a dividend and a substantial stock repurchase plan.

A Quick Look at Select Medical’s Financial Performance

The Q3 earnings report from Select Medical Holdings Corporation showcases their resilience. They recorded impressive adjusted earnings of $0.50 per share, which is an upsurge from $0.46 a year before, easily beating Wall Street’s expectation of $0.43 per share. Revenue surged to $1.76B from $1.67B the previous year, surpassing the anticipated $1.74B.

The company’s optimism is evident as they revise their 2024 earnings forecast to $2.09-$2.20 a share. This comes alongside a raised revenue outlook now hovering between $6.95B-$7.15B.

Amidst these robust figures, Select Medical is also plunging forward with strategic expansions. The announcement of a joint venture with SSM Health to open a rehabilitation hospital in Oklahoma City earmarks a substantial aim to expand and elevate their healthcare services.

Financial Ratios And Performance Right Now

Analyzing Select Medical’s key ratios, one finds compelling insights into its financial health and operational proficiency. The operating margin sits comfortably at 9%, while the EBITDA margin is at 12.2%. This indicates efficient operations and stable cash flows. Their pretax profit margin also shows a steady figure of 6.8%, reflecting sound financial management.

Their revenue per share is a commendable $51.25, underpinning robust business activity. However, with a P/E ratio of 16.11, questions around valuation naturally arise, demanding cautious optimism. The company’s total debt to equity ratio is relatively high at 3.52, suggesting leverage is a key component of their financial strategy.

Amidst their robust earnings, one must also note the enterprise value creeping past $8.53B. This, alongside a price-to-sales ratio of 0.61, positions Select Medical attractively in terms of market valuation.

Dive into the News: What Next for SEM?

Medical Expansion: Revolutionary Ventures or Just Business as Usual?

The move with SSM Health isn’t merely a strategic win; it’s a testament to Select Medical’s ambition to integrate and expand, ensuring averting the clasp of stagnation. With facilities slated to open in December 2024, this joint endeavor seems geared to capture significant market share in inpatient rehabilitation services.

Earnings Surge: Robust Growth or a Momentary Glimmer?

The recent earnings report evokes more than just optimism; it’s a clarion call for stakeholders. Aided by a boosted EBITDA forecast of $865M-$885M, Select Medical affirms its position amidst the industry’s creme de la creme. This surge seemingly arms investors with reinforced confidence in their growth trajectory.

More Breaking News

Stock Buyback & Dividends: Faux Pas or a Tactical Maneuver?

The announced $1.0B stock repurchase program alongside a cash dividend underlines a strategy to return value to shareholders. Such corporate maneuvers often imply the company perceives its intrinsic value to eclipse current market prices, pointing further towards management’s confidence in long-term industry prospects.

Conclusion: Deciphering the SEM Narrative

Select Medical’s recent financial chronicles echo resoundingly with avowals of prosperity and tactical adeptness. Their improving financial statements, burgeoning earnings forecasts, and strategic expansion herald potentially prosperous tides ahead. However, with elevated stock prices comes the proverbial question: Is the future just as golden or fraught with unforeseen risks?

Investors must keenly observe if the company sustains this momentum amidst market oscillations, lest today’s bloom turns into tomorrow’s bust. Nonetheless, current signs are indeed promising, coaxing conclusions towards optimism—an essence that pervades Select Medical’s storyline, both on-paper and strategically.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”