AMN: Healthcare Hiring

02/29/2016 8:00 am EST


Tom Bishop

Founder, BI Research

This recommended stock started out as a traveling nurse company 30 years ago and has evolved into the largest firm serving the placement of temporary healthcare staffing and permanent physician search placement in the country, explains Tom Bishop, editor of BI Research.

AMN Healthcare (AHS) is the clear leader in healthcare staffing solutions. Business has been brisk to say the very least and continues so.  

Beyond nurses and physicians, the company also handles the placement of physician’s assistants, psychiatrists, nutritionists, diagnostic lab workers, physical therapists, and other workers in the healthcare field.

The firm recently released very strong 4th quarter results; the company beat expectations and issued strong guidance. Revenues of $403 million advanced a whopping 44%, of which an incredible 26 percentage points were organic.  

This resulted in a 100% increase in adjusted EPS to $0.47;15% higher than the consensus. Moreover, gross margins increased 240 basis points to 33.7%.

Bottom line, this is what you want to see, a company growing sales, earnings, and margins rapidly and beating estimates.

For the full year, adjusted EPS weighed in at $1.64, up 98% over 2014 on a 41% increase in revenues to $1.46 billion. 

Today, the shares trade at just 13 times the most recent 2016 analyst estimate. The five analysts who follow the stock are all at strong buy.  And the shares are ranked 1 by Value Line and Zacks. 

For all these reasons, the shares do not deserve to be down and I believe investors will ultimately get it right.  

There are 100,000 physician job openings and 300,000 nurse openings. Quite simply, hospitals are understaffed. At the end of the day, it’s a supply and demand thing. 

Meanwhile, the company is hiring staff of its own to increase its pool of nurses and physicians, with staff to do that up about 50%. 

Industry leading training and benefits also plays a role in staying number one.  Due to the shortage, compensation for these workers is climbing and so is the company’s cut of that.

From where I sit, it’s all good.  Ultimately, the shares should follow the estimates higher and AHS remains one of our most attractive buys. 

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