3/8/25
The Ensign Group (NASDAQ: ENSG) operates in the post-acute healthcare sector, running skilled nursing, rehabilitative, and senior living facilities. Over the years, the company has expanded steadily, maintaining a strong financial foundation while growing its footprint.
For dividend investors, Ensign presents an interesting opportunity—not because of a high yield, but due to its consistent dividend growth and financial stability. If you’re looking for long-term income appreciation rather than immediate cash flow, this stock may be worth a closer look.
Key Dividend Metrics
📌 Dividend Yield: 0.19% – Not the highest, but consistently increasing
📌 Annual Dividend Payout: $0.24 per share
📌 Payout Ratio: 4.74% – Extremely low, leaving room for future increases
📌 Consecutive Dividend Growth: 10+ years and counting
📌 5-Year Average Dividend Yield: 0.26%, showing stability in yield levels
📌 Recent Dividend Increase: Yes – Management continues to raise payouts
Dividend Overview
At first glance, Ensign’s dividend yield of 0.19% isn’t something that will turn heads. But that’s only part of the story. The real appeal lies in the growth of the dividend rather than the immediate yield. Management has consistently increased payouts over the years, showing a clear commitment to rewarding shareholders.
The company’s last dividend was paid on January 31, 2025, with an ex-dividend date of December 31, 2024. The current payout remains modest, but for investors willing to take the long-term approach, the combination of steady dividend increases and capital appreciation could make this stock a solid option.
Dividend Growth and Safety
Few stocks have a payout ratio as low as Ensign’s. At just 4.74%, the company retains nearly all of its earnings, allowing for future dividend increases without financial strain. This kind of flexibility is a great sign for sustainability.
Dividend growth has been strong over the last five years, consistently outpacing inflation. While it’s not a high-yield stock, its reliability makes it attractive for those who prefer a steady, growing income stream.
Another factor supporting dividend safety is cash flow. Ensign generated $347.19 million in operating cash flow over the past year, providing more than enough to cover dividends and reinvest in the business. With this level of financial strength, dividend payments should remain secure and continue rising over time.
Chart Analysis
Price Action and Moving Averages
The stock price of Ensign Group (ENSG) has seen a clear shift in momentum over the past few months. After a strong uptrend through the middle of last year, the price hit a peak and began to roll over. The 50-day moving average (light blue line) had been trending well above the 200-day moving average (dark blue line), confirming the bullish trend. However, that momentum has since faded, and the stock recently experienced a death cross, where the 50-day moving average crossed below the 200-day moving average. This is typically seen as a bearish indicator, signaling potential further weakness ahead.
Despite this, the price is currently attempting to stabilize around the $130 level. It has spent the last few weeks consolidating just above this mark, suggesting buyers are stepping in to support the stock. The recent close at $130.33 is slightly above where the stock opened for the day, indicating mild bullish sentiment, but it remains below both key moving averages.
Volume and Market Participation
Trading volume has remained relatively low in recent sessions, except for a major spike in October. That surge in volume often signals an event-driven move, such as earnings, news, or institutional activity. Since then, volume has settled down, which could mean that fewer investors are actively trading the stock right now. Without significant volume, any price movement may not have strong conviction behind it.
Low volume can also indicate indecision in the market. Investors might be waiting for a clearer direction before committing capital, which makes the moving averages an important area to watch in the coming weeks. If the stock can reclaim its 50-day moving average with a surge in volume, it could be an early sign of renewed strength.
Relative Strength Index (RSI)
Looking at the RSI (Relative Strength Index) at the bottom of the chart, the stock has been hovering in the middle of the range, neither overbought nor oversold. This suggests that it’s not in an extreme condition and could go either way. However, a notable detail is that the RSI has been making lower highs, indicating weakening momentum. If it falls below the 30 level, that would suggest the stock is oversold, potentially attracting buyers looking for a bargain.
On the flip side, if the RSI starts climbing back toward the 70 level, it would mean bullish momentum is returning, and the stock could be setting up for a rebound. For now, it’s in a neutral zone, meaning the market hasn’t yet decided on the next major move.
Recent Candle Patterns
Looking at the most recent price action, the last few daily candles show small bodies with relatively tight trading ranges. This signals some hesitation among traders. There hasn’t been an aggressive push in either direction, which aligns with the low volume. Additionally, the presence of wicks on both ends of the candles suggests some intraday volatility, with buyers and sellers testing different levels but ultimately closing near where they opened.
If the stock starts forming larger green candles with strong closes near the highs of the day, it could indicate a shift in sentiment. On the other hand, if the price starts breaking below recent lows with increased selling pressure, it may continue trending downward in the short term.
Analyst Ratings
📈 Upgrades
Several analysts have given positive ratings to Ensign Group recently. In February, both Stephens & Co. and Macquarie expressed optimism about the stock. Stephens & Co. maintained an overweight rating and set a price target of 155. Macquarie upgraded their target slightly from 165 to 166, keeping an outperform rating.
These upgrades were driven by strong financial performance, including a 15.5% revenue increase year-over-year and a 267.4% jump in net income. Analysts also pointed to the company’s solid 8.9% operating margin and ongoing expansion efforts in healthcare, which strengthen its long-term outlook.
📉 Downgrades
On the other side, some analysts have taken a more cautious stance. In January, Truist Financial adjusted its outlook, lowering its price target from 170 to 155 and shifting to a hold rating.
The main reason behind this downgrade was concern over the company’s debt levels, as Ensign’s debt-to-equity ratio is above 100%, which could be risky if interest rates remain high. Additionally, some analysts felt the stock was priced too aggressively, with a price-to-earnings ratio of 25.2, suggesting limited near-term upside.
🎯 Consensus Price Target
The latest analyst estimates put the 12-month price target at approximately 165.17. Targets range from 155 on the low end to 175 on the high end, showing mixed expectations for future performance. While some see continued growth, others remain cautious due to valuation concerns and financial leverage. Investors may want to weigh both perspectives when considering this stock.
Earnings Report Summary
The Ensign Group (ENSG) wrapped up 2024 on a strong note, delivering solid growth across key financial metrics. The company continues to expand its footprint in post-acute healthcare, and the latest earnings report shows why investors have taken notice.
Fourth Quarter 2024 Highlights
Revenue came in at $1.13 billion, marking a 15.5% increase compared to the same period last year. That kind of growth shows the company is successfully scaling its operations.
Net income was especially impressive, soaring 267.4% year-over-year to $79.7 million. Earnings per share followed suit, coming in at $1.36, more than tripling from the prior year’s quarter. On an adjusted basis, EPS landed at $1.49, a steady 16.4% increase.
Occupancy rates at both same-facility and transitioning-facility locations saw noticeable growth, rising 2.3% and 4.7%, respectively. This suggests demand remains strong, and more patients are utilizing Ensign’s services.
One of the standout stats was the jump in skilled revenue, which climbed 7.5% at same facilities and 10.4% at transitioning locations. Managed care days also increased significantly, up 6.6% and 27.7%, reflecting the company’s ability to attract more patients on private insurance plans.
Full Year 2024 Highlights
For the full year, revenue hit $4.26 billion, a solid 14.2% increase from 2023. Net income grew 42.3%, reaching $298 million, while earnings per share surged 40.3% to $5.12. On an adjusted basis, EPS came in at $5.50, a 15.3% year-over-year increase.
Occupancy trends continued upward, with 2.7% growth at same facilities and 4.1% at transitioning locations over the full year. More patients, higher demand, and a steady expansion strategy are clearly driving these numbers.
Skilled services revenue totaled $4.1 billion, up 13.9%, showing that Ensign’s core business remains strong. The company’s Standard Bearer segment, which includes real estate holdings, reported revenue of $95.1 million, growing 15.3% from last year.
Looking at cash flow and profitability, Ensign is firing on all cylinders. Management emphasized how record-breaking operational performance, improving occupancy, and increasing managed care census are driving long-term growth. The numbers back up that optimism, setting the company up for another strong year ahead.
Financial Health and Stability
Ensign’s financials paint a picture of a company that is both growing and stable:
✔️ Revenue Growth: Up 15.5% year-over-year, demonstrating consistent expansion
✔️ Net Income Growth: A remarkable 267.4% increase from last year, signaling strong profitability
✔️ Operating Margin: 8.9%, which is solid for the healthcare services sector
✔️ Debt Levels: $1.97 billion in total debt with a debt-to-equity ratio of 107.28%—a bit high but manageable
✔️ Cash Reserves: $526.85 million, providing liquidity and financial flexibility
The company’s debt load is worth monitoring, but given the strength of its revenue and cash flow, it doesn’t appear to be a major concern. Ensign has been able to fund expansion while keeping its financial health intact, which is a positive sign for investors.
Valuation and Stock Performance
Ensign’s stock is currently priced at $130.33 per share, with a price-to-earnings (P/E) ratio of 25.2. That’s not cheap, but it’s reasonable given the company’s growth. Looking ahead, the forward P/E ratio of 20.66 suggests that investors expect earnings to continue rising.
Other key valuation indicators:
🔹 PEG Ratio: 1.38 – A fair valuation for a growth-oriented stock
🔹 Price-to-Sales: 1.76 – Not excessive for a healthcare services provider
🔹 Price-to-Book: 4.03 – Higher than some peers but justified by asset strength
Over the past year, the stock has traded between $113.27 and $158.45. Right now, it’s closer to the lower end of that range, which could signal a more attractive entry point for long-term investors.
Looking at technical trends, the 50-day moving average sits at $133.85, while the 200-day moving average is $138.26. The stock is currently trading below both, which suggests some short-term weakness but also potential value if you believe in the company’s long-term growth.
Risks and Considerations
Every investment has risks, and Ensign is no exception. Some key concerns to keep in mind:
⚠️ Low Yield – The dividend is growing, but it remains small. Investors seeking immediate income may not find this stock appealing.
⚠️ Debt Levels – The debt-to-equity ratio is over 100%, which is on the high side. While manageable, it’s something to monitor.
⚠️ Valuation – A P/E of 25.2 means the stock isn’t cheap, so upside may be limited in the near term.
⚠️ Industry Challenges – Healthcare regulations, labor costs, and reimbursement changes could impact profitability.
Final Thoughts
Ensign Group is one of those companies that quietly delivers solid results. It won’t be the first choice for income-focused investors looking for high yields, but it offers a combination of consistent dividend growth, strong cash flow, and financial stability.
For investors who value long-term appreciation and dependable dividend increases, Ensign could be a compelling option. While the yield may be low, the company’s track record of raising dividends, solid financials, and steady growth make it an interesting stock for those playing the long game.
This isn’t the stock to buy if you’re looking for immediate high-yield returns, but for those who appreciate a strong foundation and growing income over time, Ensign is worth considering.
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