IPC Hospitalist Co. - Aggressive Growth

IPC The Hospitalist Co (IPCM) analysts are raising their outlooks as the company continues to snap up smaller companies. Growth rates are looking good and are trading at a decent value for this Zacks #1 Rank (Strong Buy).

Company Description

IPC The Hospitalist is a physician group practice company that provides hospitalist medicine and other facility-based services. The company practices in acute, sub-acute and long-term care settings.

Net Income Jumps 31%

While the latest quarterly report was back in late October, it was a nice one. Revenue rose 17%, to $91 million on a 16% increase in patients. Same-market area patient revenue (similar to same-store sales) was up 15%.

Net income was up came in at $6.1 million, up from $4.6 million, and broke down to 37 cents per share. EPS topped the Zacks Consensus Estimate by 3 cents for back-to-back surprises.

Bullish Estimates

We saw a rush of upward estimate revisions on the earnings news, but what I particularly like is the recent moves. In the past month we have seen 5 analysts raise estimates for 2010, but they were minor changes and left the consensus unchanged at $1.43.

However, the 15 revisions for 2011 moved the average estimate to $1.78, up 6 cents. I know that does not sound like much, but when analysts are unanimously raising their outlook in between earnings reports that is a very bullish signal.

Given the $1.14 earned in 2009, the expected growth rates are 26% and 24%, respectively.

Valuations

At 19 times 2011 estimates, IPCM does not exactly scream value. But when you factor in the growth prospects, you have a PEG of 1.0, which shows a fair price. Also both of those figures are slightly better than the peer group is averaging.

The Chart

Shares of IPCM have only been trading for a few years, but below you can see that fantastic long-term earnings trend. Each colored line is a year's consensus estimates. Take a look how the numbers climb consistently and the drastic moves we are seeing recently.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
 
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