Cross Country: A Strong Buy - Analyst Blog
In fact, estimates have been rising ever since the company reported better-than-expected earnings in the third quarter of 2013 on Nov 6.
Why the Upgrade?
On Dec 2, this provider of healthcare staffing solutions acquired the operating assets of On Assignment's Allied Healthcare staffing division for $28.7 million. The acquisition, which was funded with a combination of cash and borrowings under its credit facility, is expected to be accretive to Cross Country's 2014 earnings by approximately 4 cents per share. Post-acquisition, the company will retain the key managers of Allied Healthcare.
We believe the acquisition is a strategic fit for Cross Country, as it will strengthen its customer base and expand its market presence. In addition, the acquisition perfectly complements its existing lines of business, both from a geographic and staffing specialty perspective.
The Allied Healthcare business owns 84 employees and makes placements in more than 125 specialties from 23 branch offices. It generated $39.5 million in revenues in 2012 and is projected to report approximately $41 million in revenues by the end of the fourth quarter 2013.
We expect the acquisition to boost the company's revenues, which declined in the recently reported third quarter. Despite sluggish sales, Cross Country posted earnings of 5 cents, which surged 150% year over year and were also above the Zacks Consensus Estimate of a loss of 1 cent. The upswing in earnings came on the back of strong pricing and cost management, which also led to improvement in margins.
This staffing firm witnessed sharp upward estimate revisions after announcing its third quarter 2013 results. Most of the estimates for 2013 and 2014 increased over the past 60 days.
Other Stocks to Consider
Other players worth considering in the staffing industry include AMN Healthcare Services Inc. ( AHS ) and Korn/Ferry International ( KFY ), both with a Zacks Rank #2 (Buy).