Concerned about aging? Start investing in Addus now!The aging U.S. population is set to double by 2050, increasing the need for caregivers. Addus HomeCare Corporation, based in Frisco, Texas, provides essential personal care, hospice, and home health services. With a market cap of $2.35 billion, Addus reported $1.115 billion in revenue in June 2024, with a 27% profit increase. The company is debt-free and has major shareholders like Blackrock and The Vanguard Group. EPS is forecasted to grow significantly by December 2025. With a growing need for home healthcare services, the company is well-positioned to expand its customer base and market presence.
Company Overview
Addus HomeCare Corporation and its subsidiaries offer personal care services for the elderly, disabled, and those at risk of hospitalization in the U.S. It operates in three areas: Personal Care, Hospice, and Home Health. The Personal Care segment helps with daily activities like bathing, grooming, and meal preparation. The Hospice segment provides care and support for terminally ill patients and their families. The Home Health segment delivers skilled nursing and therapy services for those recovering from illness or hospitalization. Its clients include government agencies, managed care organizations, insurers, and private individuals. Founded in 1979, Addus is based in Frisco, Texas.
Investment Advice by Naranj Capital
Buy Addus Homecare Corporation
NASDAQ:ADUS
● Buy Range- 120 - 125
● Target- 150 - 160
● Potential Return- 25-30%
● Duration- 10 -12 Months
Market Capitalization - $ 2.35B
Sector - Healthcare (Nursing)
Technical Analysis
● The monthly chart indicates a clear upward trend in prices.
● Earlier, the stock peaked near the 129 (128.8 to be precise) level before experiencing a correction, which was subsequently followed by an elongated consolidation period from November 2020 to July 2024.
● Recently, the stock has successfully made a multi-year breakout of the previous resistance zone and has maintained its position above this breakout level.
● We expect this momentum to persist, leading to further price increases in the days ahead.
Entry, Exit & Stop-loss
● Entry with Capital allocation strategy
(1) consider adding 50% of your desired quantity at the current market price (132 - 133).
(2) The second buying opportunity will be in the 120 - 122 range, where you can also add rest 50% of your quantity.
● Target
Chart analysis indicates a promising upside potential of 25-30% for this stock from the best buying level, with a target around the 155 to 160. There is also a strong likelihood that the stock could exceed this target.
● Stoploss
It is crucial to implement a strict stop-loss below the 115 level, as we anticipate that the stock may encounter challenges if it drops to this point.
Revenue Breakdown
The company generates its revenue through three primary segments.
(1) The personal care sector represents around 74.2% of the overall revenue, totaling $827 million out of $1.11 billion.
(2) Meanwhile, hospice services contribute nearly 19.7%, amounting to $219.8 million of the total revenue.
(3) The home health segment accounts for approximately 6.1%, which translates to $67.8 million of the overall revenue.
Sales & Profit Analysis
● A noticeable rise in revenue has been observed. For the June quarter, revenue reached $1.115 billion, marking an 11.6% increase from $999 million in June 2023 (YoY) and a 2.5% rise from $1.08 billion in March 2024 (QoQ).
● Additionally, profits surged by 27% in the latest quarter, climbing to $68.89 million from $53.83 million in the same quarter last year, and up 5% from $65.67 million in March 2024.
● The profit margin has also improved, increasing from 5.4% to 6.2% year-on-year.
● The basic EPS for the June 2024 quarter is reported at 4.28, marking a significant increase of 27% from 3.37 in the same quarter last year.
Peer Companies
(1) Privia Health Group (NASDAQ: PRVA) - $ 2.41B NASDAQ:PRVA
(2) Amedisys (NASDAQ: AMED) - $ 3.21B NASDAQ:AMED
(3) Astrana Health (NASDAQ: ASTH) - $ 2.33B NASDAQ:ASTH
Valuation
● P/E vs Fair P/E Ratio
➖ The current PE ratio stands at 34.1x, slightly expensive to the estimated Fair PE of 28.7x.
● P/E Ratio vs Peers
➖ ADUS offers great value with a Price-To-Earnings Ratio of 34.1x, significantly lower than the peer average of 62.7x.
● P/E Ratio vs Industry P/E
➖ ADUS seems to come at a higher price, boasting a Price-To-Earnings Ratio of 34.1x, notably surpassing the US Healthcare industry average of 26.2x.
Debt Analysis
➖ ADUS stands proudly as a debt-free entity, a remarkable transformation from five years ago when its debt to equity ratio stood at 12.9%. This significant shift underscores the company's commitment to financial health and stability.
Top Shareholders
● Blackrock currently holds a substantial 16% stake in this stock, reflecting an impressive increase of 11.2% since the March quarter.
● Meanwhile, The Vanguard Group has also boosted its investment, raising its stake by 8.5% from the previous quarter, bringing their total holding to 7.74%.
Earnings per Share Growth Forecasts
Experts forecast that the earnings per share (EPS) could increase from $4.28 to $4.51 by December 2024, and further rise to $5.03 by December 2025.
Conclusion
With the growing need for home healthcare services, the company is well-positioned to broaden its customer base and enhance its market presence.
ADUS trade ideas
$ADUS might be looking for more downsideThe stock made a nice 5 wave move to the downside in a Diagonal structure a quick counter trend move for a B or 2, followed by a 5 wave move of a lesser degree again to the downside completed with a 3 wave move to the upside on the same degree. I think there's more downside coming all the way to those 127.8-161.9 Fib Extension Levels. Price made a nice 5 wave move to the upside on the primary degree, we could consider that a Wave 1, right now a believe we are correcting all the previous move and usually Wave 2 has the deepest correction, however, this could be a zig-zag finishing between 127.8-161.8 Fib Extension or it could be a 5 wave move to the downside for and A followed by a B and then 5 waves more to the downside to complete it thus bringing price closer to that 61.8 Fib correction. Time will tell.
$ADUS - reverse point$ADUS - Long-term factor - the stock is on the edge of a rising trend, since mid-2016, and there is a support level at $75.4. In case of a pullback - from it the target is up $93.2. and further down within the channel. A stop is to be placed below $73. In the medium term, the trend is downward, since January 2021, at the breakdown of $75.4, the stock will go to the level of $61.8-$62.
Its not investment recommendation
ADUS: Starter positionWas too busy following the news and big tech all day and forgot to check this chart!
ADUS finally broke out on above average volume, will start 1/4 of my position here tomorrow morning
Notes:
(x) Looking to has ADUS as a portfolio anchor in my margin account, so will not hold more than $2.5k worth of shares
(x) Expecting outperformance this year
ADUS- Prepping for a dropCould see a decent pull back here. RSI steep drop, MACD weakening slightly. This post is mostly not about that.
We have tops from way back in August 2018 forming a possible upper trend on ascending wedge. 2 Possible bottoms from either April or September of this year. If this plays to Apex we'd see the drop around Jan or Feb of 2020.
Red and Black dashes are potential support, also one possible around $89 range.
Recap: Down a few days, back up for new highs for a bit and in the next 3 months or so a possible drop that could be big.
This is not advice. DYOR
ADUS OverboughtRSI overbought territory. Redline on stoch has been a very prominent turning point for ADUS. The last 2 were drops from around 2-6 dollars within a few days. Hasn't hit the line yet but still a good watch. Also watching Distribution to see if it drops below the blue line which has held since January. Waiting to see if this in a channel play, the ascending wedge or a drop out of either/both. Could see some upside still, appears to be dropping due to falling outside of channel/wedge as well as BB on open. I've been watching ADUS for a few weeks waiting for this point to come lol
This is not advice.
ADDUS HOMECARE CORP NASDAQ ADUSAddus HomeCare Corporation provides personal care services to elderly, chronically ill, disabled persons, and individuals who are at risk of hospitalization or institutionalization in the United States. It operates in three segments: Personal Care, Hospice, and Home Health. The Personal Care segment provides non-medical assistance with activities of daily living. Its services include assistance with bathing, grooming, oral care, assistance with feeding and dressing, medication reminders, meal planning and preparation, housekeeping, and transportation services. The Hospice segment provides palliative nursing care, social work, spiritual counseling, homemaker, and bereavement counseling services for people who are terminally ill, as well as for their families. The Home Health segment offers skilled nursing and physical, occupational, and speech therapy for the individuals who requires assistance during an illness or after surgery. The company's payor clients include federal, state, and local governmental agencies; managed care organizations; commercial insurers; and private individuals. As of December 31, 2018, the company served consumers through 156 offices located in 24 states. Addus HomeCare Corporation was founded in 1979 and is based in Frisco, Texas.
ADUS- Support breakdown short from $31.63 to $25.17ADUS seems breaking down from an upward channel. Moneyflow going sharp down. Overall interesting short setup.
* Trade Criteria *
Date First Found- November 9, 2017
Pattern/Why- Support breakdown short, capturing the crash
Entry Target Criteria- wait for a break below $31.63 (hit November 14, 2017)
Exit Target Criteria- $25.17
Stop Loss Criteria- $34.33
Please check back for Trade updates. (Note: Trade update is little delayed here.)
ADUS - Upward channel breakdown short from $31.93 to $23.23ADUS seems breaking down from an upward channel. Moneyflow going sharp down. Overall interesting short setup
* Trade Criteria *
Date First Found- August 23, 2017
Pattern/Why- Upward channel breakdown short.
Entry Target Criteria- Break of $31.93
Exit Target Criteria- 1st Target $27.13, 2nd Target $23.23
Stop Loss Criteria- $34.53
Please check back for Trade updates. (Note: Trade update is little delayed here.)