Reasons to Retain Chemed Stock in Your Portfolio Now

Core Viewpoint - Chemed Corporation (CHE) is anticipated to experience growth in the upcoming quarters, primarily driven by the VITAS business, while facing challenges from a sluggish macroeconomic environment and competitive disadvantages [1][7]. Group 1: Company Performance - Chemed's stock has increased by 11.7% over the past year, underperforming compared to the industry's growth of 33.9% and the S&P 500's increase of 32.3% [2]. - The company has a market capitalization of $8.72 billion and an estimated earnings growth rate of 16.2% for 2024, which is higher than the S&P 500's growth rate of 15.7% [2]. - In the trailing four quarters, Chemed delivered an average earnings surprise of 1.88% [2]. Group 2: Key Upsides - The VITAS segment has shown significant improvement, with a robust start to the second quarter following the acquisition of Covenant Health and Community Services, leading to an 11% increase in admissions and a 14.4% rise in Average Daily Census (ADC) [3][4]. - VITAS' net revenues increased by 16.7% year over year, supported by a 2.5% rise in the average Medicare reimbursement rate and a 14.4% increase in days of care [4]. - The net bedside headcount for VITAS increased by 234 licensed professionals, indicating a strong operational outlook [4]. - The Roto-Rooter brand has demonstrated resilience, maintaining strong close rates at the call center and during technician dispatch [5]. - The commercial plumbing business has seen unprecedented high demand post-pandemic, with initiatives to enhance sales staff and customer relationship management expected to positively impact performance [6]. Group 3: Key Downsides - Chemed faces macroeconomic headwinds, including rising staffing and labor costs, inflationary trends, and increased logistics costs, which have negatively impacted performance [7]. - In the second quarter, the cost of services provided and goods sold rose by 4.2% year over year, while selling, general, and administrative expenses increased by 7.7% [7]. - The competitive landscape for both Roto-Rooter and VITAS is challenging, with a need for innovation and effective market response to maintain operational success [8]. Group 4: Financial Estimates - The Zacks Consensus Estimate for Chemed's 2024 earnings per share (EPS) is$ 23.58, remaining constant over the past 30 days [9]. - The estimated revenues for 2024 are projected at $2.44 billion, indicating a 7.75% increase from the previous year [9].