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What: Shares of health management services company Accretive Health
So what: For the quarter, Accretive Health reported a profit of $0.17, $0.01 ahead of consensus expectations, on a 53% year-over-year jump in revenue to $260.1 million (which was also ahead of estimates). Oddly enough, the company's 2012 forecast wasn't nearly as optimistic as Wall Street had expected. Accretive is forecasting an adjusted profit of $0.61 to $0.65 and sales of $1.09 billion to $1.12 billion versus the Street's expectation of $0.69 on sales of $1.12 billion.
Now what: Accretive Health's growth is not in question, but I definitely think their valuation is. Based on its adjusted 2012 forecast, the company is trading at about 41 times forward earnings. That's expensive, even for a company projecting it will grow sales by 34% in the coming year. I would pass on the stock here based on valuation alone but would consider adding it to My Watchlist.
Craving more input? Start by adding Accretive Health to your free and personalized watchlist so you can keep up on the latest news with the company.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.