HCSG - Healthcare Services Group: Maintaining Our Bearish Stance

2024-01-30 11:26:11 ET

Summary

• Healthcare Services Group stock has dropped almost 35% since last year, underperforming the market.
• HCSG's return on capital is significantly lower than its 5-year average and the sector average.
• Ongoing uncertainty surrounding the nursing home staffing rule and bearish EPS revisions contribute to the 'Sell' rating on HCSG.

Intro

We wrote about Healthcare Services Group, Inc. ( HCSG ) in October of last year when we reiterated our 'Sell' rating on the stock. Since the initial sell rating in August of last year, shares are now down almost 35% and are down 5%+ over the past 16+ weeks. The S&P500 incidentally has returned close to 13% over the same 16-week timeframe. Suffice it to say, we believe the negative return in HCSG since last October would most likely have been greater but for the strength of the general market over the past 3+ months. The company's recent Q3 earnings report at the end of October last year did put a floor in the stock but the rally out of those lows has been weak thus far with the stock still not being able to regain its 50-day moving average with conviction....

For further details see: