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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
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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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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”