GOOD READS

Acadia Medical (ACHC): Zacks Rank Buy

RELATED QUOTES

SymbolPriceChange
ACHC40.21

Shares of Acadia Medical (ACHC) reached a 52-week high of $25.76 on January 8 following its accretive acquisition of Greenleaf Center a day earlier. Several strategic investments of late and impressive fiscal third-quarter results helped this healthcare services provider become a Zacks Rank #1 (Strong Buy).

The company has delivered an average earnings surprise of 16.7% over the past four quarters, including a 13.3% beat in the third quarter. Given its expected long-term earnings growth rate of 29.0%, this stock looks like it would fit well into the portfolio of a growth seeking investor.

Rank Drivers

On November 6, 2012, Acadia Medical reported fiscal third quarter adjusted earnings per share (EPS) of 17 cents, beating the Zacks Consensus Estimate by 13.3%. However, the result fell short of the year-ago performance due to an increase in its shares outstanding, completion of the PHC Inc. acquisition in November 2011 and an increase in interest expenses.

On January 7, 2013, Acadia Medical purchased Greenleaf Center, a 50-bed acute inpatient psychiatric facility in Georgia, from South Georgia Medical Center. The company noted that Greenleaf, which has $7 million of annual revenues, will remain accretive to its 2013 EPS.

Recently, Acadia Medical has made several strategic acquisitions, including Behavioral Centers of America and AmiCare Behavioral Centers on December 31, 2013. In November, it purchased Park Royal Hospital, a 76-bed acute inpatient psychiatric hospital in Florida.

Also in November, the company declared its intention to buy Arkansas based AmiCare Behavioral Centers, which operates four inpatient psychiatric facilities. Management expects this transaction to be accretive to its 2013 financial results. The company is greatly optimistic about these recent developments, which are expected to act as major catalysts for future growth.

Earnings Estimates Moving Up

The Zacks Consensus Estimate for 2012 is 64 cents, up about 23.8% year over year. Meanwhile, over the past 30 days, the Zacks Consensus Estimate for 2013 gained 4.3% to 98 cents per share, representing year-over-year growth of about 52.9%.

Premium Valuation

Acadia Medical's valuation looks stretched compared to its peers by most metrics. Based on the 2012 earnings estimate, the company is trading at a P/E of 25.21x, which is almost 1.7 times the peer group average of 16.63x. The price-to-book ratio of 4.10x is also substantially higher than the peer group average of 2.10x. The premium is warranted given a higher long-term earnings growth rate of 29.0%, compared with the industry average 12.7%.

However, with respect to return on assets (:ROA), Acadia Medical looks attractive at 3.9%, a marginal premium to the peer group average of 3.5%.

Acadia's price performance has been reasonably strong. Following the release of its fiscal third-quarter results, the stock showed a steep uptrend and is currently trading above both its 50- and 200-day averages.

Acadia Medical is a provider of inpatient behavioral healthcare services. As of September 30, 2012, the company operates a network of 33 behavioral health facilities with over 2,300 licensed beds in 19 states. Acadia provides psychiatric and chemical dependency services to its patients in a variety of settings, including inpatient psychiatric hospitals, residential treatment centers, outpatient clinics and therapeutic school-based programs. The company has a market cap of $1.04 billion.

Other Zacks #1 Rank (Strong Buy) medical devices stocks include Spherix Inc. (SPEX) and Syneron Medical Ltd (ELOS).


Want More of Our Best Recommendations?

Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.

Learn More>>


ACADIA HEALTHCR (ACHC): Free Stock Analysis Report

Zacks Investment Research



More From Zacks.com

Quiz: How well do you know India's economy?

Question 1

Which of these products is India the world's largest producer of?

Poll Choice Options
  • Wheat
  • Rice
  • Milk
1
2
3
4
5
6
7
8
9
10

Latest News

  • IGIA to become zero-diversionary by October: Committee

    New Delhi, April 24 (IANS) The Indira Gandhi International Airport (IGIA) is set to become a zero-diversionary airport by October as the government is set to implement the recommendations set out by an expert committee which was formed to look into the matter. According to the Civil Aviation Ministry, in a meeting held Thursday with all stakeholders including India Meteorological Department (IMD), Airports Authority of India (AAI), Delhi International Airport Pvt Ltd (DIAL), Bureau of Civil …

  • Air India seeks to lease 14 Airbus A320 aircraft

    Air India Ltd [AIN.UL] is seeking to lease 14 Airbus A320 aircraft, according to a tender document posted on the state-run carrier's website. Air India has asked for bids for up to six-year-old A320 aircraft ... …

  • Sri Lanka opposition protest to block Packer's casino plans

    Hundreds of Sri Lankan opposition party members marched in protest in Colombo on Thursday to pressure the government to stop Australian gambling tycoon James Packer from opening casinos in hotel projects planned by his Crown Resorts Ltd (CWN.AX). President Mahinda Rajapaksa's coalition government holds a two-thirds majority in parliament, but its stance on casinos has drawn flak from Buddhist and other religious leaders, opposition parties and even from within its own ranks. Currently, there …

  • Met office rules out surplus monsoon in 2014
    Met office rules out surplus monsoon in 2014

    India is likely to experience below-average monsoon rainfall in 2014, the government's weather office said on Thursday, if the El Nino weather pattern affects the four-month-long rainy season. The monsoon is vital for India as half of its farmland lacks irrigation. To cut dependence on rains, India plans to expand its farmland under irrigation by at least a tenth by 2017. Rainfall is expected to be 95 percent of the long-term average, with a margin for error of plus or minus 5 percent, …

  • Debit cards with an extended credit limit!

    The use of plastic money and the increasing popularity of such formats have revolutionized the way payments are made and received. The most popular types of plastic … Read more » …

IN-DEPTH ANALYSIS & INTERVIEWS

  • Too good to be true?

    Developers are offering lucrative buyback schemes. But such promises may not be always kept. …

  • Leaderspeak with Vikram Limaye

    Vikram Limaye MD & CEO, IDFC Ltd shares many firsts from his life. …

  • The Greening of the House of Tatas

    How a dedicated team converted a 90-year-old heritage structure into a benchmark for environment-friendly buildings. …

  • Appy Voting

    Mobile and online apps, seeking to inform or influence voters, have been more active than ever before in this election. …

  • In the crosshairs

    Why the future of FDI in multi-brand retail looks bleak after the polls. …

  • A Samurai from Chandigarh

    Advertising veteran Sandeep Goyal is disarmingly frank as he recounts his years with Dentsu. …

  • Falling in line

    Global investors gear up to working with Narendra Modi despite reservations about his secular credentials. …

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    16.52-0.33-1.96%
    UNITECH.BO
    14.31-0.27-1.85%
    SUZLON.BO
    120.40+7.00+6.17%
    FRL.BO
    66.05+4.10+6.62%
    MANGCHEM.BO
    54.40+1.65+3.13%
    HCLINFO.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    16.20+2.70+20.00%
    JAGSONPH.BO
    53.50+8.90+19.96%
    RUSHIL.BO
    40.45+6.45+18.97%
    RCIIND.BO
    63.95+8.90+16.17%
    MRPL.BO
    24.00+3.10+14.83%
    NELCAST.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    10.95-10.95-100.00%
    4THGEN.BO
    17.30-17.30-100.00%
    ALFAICA.BO
    16.81-16.81-100.00%
    AMAL.BO
    11.73-11.73-100.00%
    BORAX.BO
    29.95-29.95-100.00%
    BRADYM.BO
  •  
    Recent Quotes
    Symbol Price Change % ChgChart 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
  • Recent Quotes News

    •  
      Sign-in to view quotes in your portfolios.