Healthcare Services Group (HCSG): A Consistent Growth Story

I was scanning charts over the weekend and wanted to shares one that stuck out: Healthcare Services Group (NASDAQ:HCSG).

Below is an fundamental overview of the company, along with a stock chart / trend analysis.

Healthcare Services Group (HCSG)

As mentioned above, this was one of the nicer weekly charts in scans this weekend. The stock has been riding its weekly cloud higher for five years and is now looking to clear a sideways $37/$41 zone, measuring to a $45 near-term target.

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Healthcare Services Group is a $2.95B provider of management and operating services to the housekeeping, facility maintenance, and dietary service departments in nursing homes, retirement complexes, rehabilitation centers, and hospitals. Shares trade 30.15X Earnings, 1.89X Sales, and yields a 1.8% dividend.

HCSG has a strong history of revenue growth and projecting 9-10% annual growth for 2017 and 2018 while EPS set to rise 14%/year, reaching $1.36 in 2018 from $0.31 in 2014. HCSG manages over 3,800 facilities with a 90% client retention rate, the breakdown is 18% Laundry/Linen, 38% Dining/Nutrition, and 44% Housekeeping.  It is clearly a play on the aging of America, but also operates in a growing market with little competition.  With no debt, strong cash flows, and a 27.3% ROIC, HCSG is deserved of its premium multiple with a long runway to continue to post strong growth.  It’s operational excellent also results in little variability for quarterly results, and is a long term thematic investment.

Healthcare Services Group stock chart analysis – February 13


Thanks for reading and have a great week!

Read more from Joe:  13 Small Cap Stocks With Bullish Trends


Twitter: @OptionsHawk

The author does not have a position in mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.