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CINCINNATI - Chemed Corporation (NYSE:CHE), a diversified company that operates VITAS Healthcare and Roto-Rooter, announced an additional $300 million authorized for stock repurchases. This decision, made by the Board of Directors, is part of the ongoing share repurchase program and will be financed through cash from operations and the company's revolving credit facility.
In conjunction with the buyback announcement, Chemed's Board has also declared a quarterly cash dividend of 50 cents per share, consistent with the previous dividend issued in August 2024. The upcoming dividend is scheduled for payment on December 6, 2024, to shareholders who are on record as of November 18, 2024. This marks the 214th consecutive quarterly dividend paid by the company in its 53-year history as a publicly traded entity.
The actions reflect Chemed's commitment to returning value to its shareholders and demonstrate confidence in the company's financial stability and cash flow. Chemed, listed on the New York Stock Exchange and headquartered in Cincinnati, operates through its subsidiaries in the healthcare and service industries. VITAS Healthcare is known as the largest provider of hospice care in the United States, while Roto-Rooter leads in providing plumbing and drain cleaning services.
While the company has expressed positive expectations for its performance, it also cautions investors that any forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Chemed has stated it does not intend to update these forward-looking statements unless new information necessitates such revisions.
This financial strategy comes at a time when companies are carefully balancing investment in growth with shareholder returns. Chemed's announcement is based on a press release statement and provides shareholders with a clear indication of the company's direction moving forward.
In other recent news, Chemed Corporation reported mixed third-quarter results. The company's VITAS Healthcare segment demonstrated significant growth, with patient admissions increasing by 6.3% year-over-year to 16,775, and revenue rising by 17.3% to $391.4 million. In contrast, the company's Roto-Rooter division faced a 6.9% decline in revenue to $214.8 million and an 11.7% drop in call volume.
RBC Capital Markets adjusted its price target for Chemed from $697 to $633, while maintaining an Outperform rating. The firm highlighted the continued momentum in the patient census of the VITAS segment, supported by robust hiring within the company. However, the timing of a recovery in the residential services sector, particularly for Roto-Rooter, remains uncertain.
In light of these recent developments, Chemed adjusted its full-year earnings per share guidance to $23-$23.15. The company anticipates future performance for VITAS to exceed pre-pandemic growth levels, while implementing a strategy to stabilize Roto-Rooter's performance. Despite the challenges, the company's outlook remains cautiously optimistic, as expressed by RBC Capital Markets.
InvestingPro Insights
Chemed Corporation's recent announcement of an additional $300 million for stock repurchases aligns with its historical trend of shareholder-friendly actions. According to InvestingPro data, Chemed has maintained dividend payments for an impressive 54 consecutive years, showcasing its commitment to consistent shareholder returns. This long-standing dedication to dividends is further emphasized by an InvestingPro Tip indicating that the company has raised its dividend for 15 consecutive years.
The company's financial health appears robust, with InvestingPro data revealing a market capitalization of $8.31 billion and a revenue of $2.38 billion over the last twelve months as of Q3 2024. Chemed's profitability is evident, with a gross profit margin of 35.66% and an operating income margin of 15.63% during the same period. These figures suggest that the company has the financial capacity to support its buyback and dividend programs.
An InvestingPro Tip notes that management has been aggressively buying back shares, which is consistent with the newly announced repurchase authorization. This strategy, combined with the company's dividend policy, reflects a strong focus on returning value to shareholders.
It's worth noting that Chemed is trading at a P/E ratio of 26.85 (adjusted for the last twelve months), which may be considered relatively high. However, this should be viewed in the context of the company's consistent performance and shareholder-friendly policies.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Chemed Corporation, providing a deeper insight into the company's financial position and market performance.
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