Brent Shelton
Long/short equity, medium-term horizon, research analyst, mid-cap

Why Chemed Will Miss Estimates

With 42% of all deaths in the US ending with some form of hospice care and demand for the service growing by the day, espousing a contrarian viewpoint one of the industry's largest for-profit providers may appear senseless. Chemed's (NYSE:CHE) intimidating 1.4B market cap currently trades at 19x ttm EPS, and valued at 6x forward earnings estimates. The stock price is up 17% in the last four months, and 51% in the last 3 years. This industry powerhouse has consistently beat consensus estimates over the last six quarters by an average shy of 3%.

The company is best known for its two unrelated segments. The hospice division Vitas, and Roto Rooter, the largest provider of plumbing repair, sewer...

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