Healthcare Stock Needs a Post-Earnings Pop

AMED is down over 12% year-to-date

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Amedisys, Inc. (NASDAQ:AMED) is one of the largest home health providers and second largest hospice care provider in the U.S. In the thick of earnings season, the company will step into the confessional tomorrow after the close. Ahead of the event, here's what retail traders should know about the stock and its fundamentals.

Amedisys stock is down 12% in 2021 yet has maintained an 11.4% year-over-year lead. Since May, the shares' 160-day moving average has kept a tight lid on any breakouts. There isn't a lot of pessimism that can be unwound from a contrarian perspective, either; 10 of analysts in coverage rate AMED a "buy" or better, and a slim 2.2% of the stock's total available float is sold short.

AMED Stock Chart

Amedisys has a history of muted post-earnings reactions. In the last eight quarters, AMED has averaged a post-earnings move of 3.6%, regardless of direction. For Friday's trading, the options market is pricing in a larger-than-usual post-earnings move of 8.1%. 

From a fundamental point of view, Amedisys stock undoubtedly has an expensive valuation. AMED trades at an inflated price-earnings ratio of 42.73 and has a high forward price-earnings ratio of 38.17, which is difficult to justify given AMED’s revenue growth rate. The home healthcare provider's trailing 12-month revenues are only up by 2% compared to fiscal 2020 and by 38% since fiscal 2017. Nonetheless, Amedisys has had a better growth rate on the bottom line, with its trailing 12-month net income up by 10% compared to fiscal 2020 and up by a massive 566% since fiscal 2017.

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