Chemed (CHE): Assessing Valuation After Earnings Miss Draws Investor Focus

Chemed reported its latest quarterly results, with revenue coming in as expected while earnings lagged behind estimates. This earnings miss has drawn attention from investors and has sent shares down after the announcement.

See our latest analysis for Chemed.

Chemed’s share price has been under pressure lately, with a year-to-date decline of 16.3% and a 12-month total shareholder return of -22.3%. Recent earnings disappointment appears to have reinforced a fading momentum, and longer-term investors have seen muted returns in recent years.

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With the shares trading at a valuation discount and fundamentals showing mixed signals, investors are left to weigh whether Chemed is undervalued and poised for a rebound, or if the stock’s weak outlook is already reflected in its current price.

Most Popular Narrative: 24.1% Undervalued

With Chemed's last close at $441.74 and the most widely followed narrative putting fair value at $582.25, there is a sizable gap between current price and projected worth. As market attention turns to what could drive Chemed higher, one key driver stands out in the narrative's own words.

The ramp-up of new Certificate of Need (CON) locations in underserved Florida counties (e.g., Pinellas and Marion) is expected to materially expand VITAS's service footprint. This aligns with the continued aging U.S. population and the shift toward home-based care, both key drivers of higher patient volumes and long-term top-line revenue growth.

Read the complete narrative.

Want to know what's behind this lofty valuation? The secret sauce is a combination of steady growth assumptions and profit margin improvements projected over the next several years. Discover which future milestones and bold expansion moves make up the backbone of this bullish story.

Result: Fair Value of $582.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing Medicare reimbursement challenges and persistently weak demand at Roto-Rooter could limit Chemed’s margin recovery and stall the anticipated turnaround.

Find out about the key risks to this Chemed narrative.

Another View: Testing with Our DCF Model

Looking at Chemed through our SWS DCF model, the story shifts. The DCF approach puts fair value at $643.97, well above the current price. This suggests the shares may be even more undervalued than what the market multiples imply. Could the market be overlooking Chemed’s long-term growth potential, or is there more risk beneath the surface?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Chemed Narrative

If you see things differently or prefer to dive into the numbers on your own terms, you can easily craft your own story in just a few minutes. Do it your way

A great starting point for your Chemed research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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