Why LifePoint Hospitals Inc. Stock Price Increased Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of LifePoint Hospitals (NASDAQ: LPNT  ) are trading 6% higher today after initially shooting to a 14% gain at the opening bell. Investors have been flocking in following the company's strong second-quarter earnings report.

So what: LifePoint reported a 16% year-over-year rise in quarterly revenue to $1.25 billion, which produced $0.84 in earnings per share. Wall Street had expected just $1.19 billion in revenue and $0.55 in EPS. For the full fiscal year, LifePoint now expects to generate between $4.25 billion and $4.35 billion in revenue (up from an earlier range of $4 billion to $4.1 billion) and between $605 million and $620 million in EBITDA, which would result in an EPS range of $2.99 to $3.19 (up significantly from an earlier projected range of $2.38 to $2.78). Wall Street analysts were looking for a top line of $4.13 billion and EPS of $2.71, so this clearly could be a much better year for the hospital operator than many people expected.

Now what: The midpoint of LifePoint's EPS range puts its forward P/E at approximately 22.6, which is still at the higher end of its past-year valuation range. It would also put the company's earnings per share below levels reached in 2012, before compliance costs sent profits plunging. Nonetheless, this is a strong report that indicates the upside of Obamacare could easily outweigh the new cost burdens it imposes, at least for hospital operators (others in the sector have also begun to report earnings above expectations). Keep your eye on this company, as another big beat -- and another surge in share price -- might be in the cards.

Risk-free for 30 days: The Motley Fool's flagship service
Tom and David Gardner founded The Motley Fool over 20 years ago with the goal of helping the world invest...better. Their flagship service, Stock Advisor, has helped thousands of investors take control of their financial lives and beat the market. Click here to sign up today.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3045072, ~/Articles/ArticleHandler.aspx, 11/26/2014 11:52:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement