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Healthcare Services Group | $HCSG Stock | Shares Pop On Better Than Expected Q2 Revenues

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Healthcare Services Group, Inc. (NASDAQ: HCSG)

Healthcare Services Group, Inc. (HCSG), a national company that provides  management, administrative, and operating services to hospitals yesterday reported their second quarter 2017 financial results.

Healthcare Services reported second quarter earnings of $0.30 per share which beat analyst expectations of $0.29 per share. Healthcare Services reported second quarter revenues of $470.9 million which beat analyst expectations of $422.7 million.  

Healthcare Services Group, Inc. CEO’s  Comments

(comments are from April after reporting first quarter results)

“The provider community's renewed emphasis on core competencies, especially in this era of value-based purchasing, has increased the demand for outsourcing services of all kinds, including ours, that allow operators to focus on patient care and patient mix, which is really the lifeblood of their business rather than support services that tend to drain their already limited resources. This increased demand will present significant opportunities for us in the years ahead, which is why people development from the newest employee to the most experienced of leader remains our highest priority.”  Seeking Alpha

HCSG Technical Analysis

HCSG opened trading yesterday at $46.25 which was up from the previous day’s trading close of $46.11. HCSG closed trading yesterday at $46.62 and spiked up after market to $48.52, equivalent to a 4% increase from the closing price. Taking a look at the daily chart we can see the last time HCSG traded above these levels we have to go back to June 5th when it traded at $49.05.

Taking a closer look at the daily chart we can see that before the spike up HCSG had been in an overall downward trend dating back to June 2nd when it traded at $49.53. HCSG has a float of 70.57 million shares and traded 1.46 times the normal daily trading volume on Tuesday.

For trading purposes, I would like to see HCSG open trading on Wednesday above $48.00 and if it does I would be looking to take a long position at the bell with limit order. My stop loss would be $0.25 from my entry position fearing anything more than that and the stock would start to fill in the gap up.

Company Profile

Healthcare Services Group, Inc. provides management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States.

It operates through two segments, Housekeeping and Dietary. The Housekeeping segment engages in the cleaning, disinfecting, and sanitizing of resident rooms and common areas of client’s facility, as well as laundering and processing of the bed linens, uniforms, resident personal clothing, and other assorted linen items utilized at a client facility.

The Dietary segment is involved in the food purchasing and meal preparation activities, as well as in the provision of professional dietitian services, which include the development of menus that meet the dietary needs of residents. This segment also offers clinical consulting services to facilities.

As of December 31, 2016, the company provided its services to 3,500 facilities. Healthcare Services Group, Inc. was founded in 1976 and is based in Bensalem, Pennsylvania. Yahoo Finance

Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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