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I came across Res-Care Inc. (RSCR) this morning which is trading at $11.01, up $.66 on the day or 6.38% as I write. According to the , RSCR's "...principal activities are to provide residential, therapeutic, job training, educational and support services to populations with special needs, including persons with developmental and other disabilities to youth with special needs and to adults who are experiencing barriers to employment."
On February 25, 2004, RSCR reported their fourth quarter 2003 earnings results. For the quarter ended 12/31/03, revenue was $244 million vs. $234 million the prior year. Diluted eps was $.10/share vs $(0.29) the prior year.
If we look at a "5-Yr Restated" financials from Morningstar.com, we find that revenue growth has been steady since 1998 when they reported $708.4 million, increasing annually to $951.2 million in the trailing twelve months. Earnings have been very erratic with $.96/share reported in 1998, dropping to a low of a loss of $(.18)/share in 2001, and then improving the last two years to $.16/share in the trailing twelve months.
Free cash flow has been positive if a bit erratic with $18 million in 2000, $3 million in 2001, then improving to $22 million in 2002 and $57 million in the trailing twelve months.
Balance sheet-wise, per Morningstar, is fine if not perfect with $95.1 million in cash and $160 million in other current assets as opposed to $117.9 million in current liabilities and $263.8 million in long-term liabilities.
If we check "Key Statistics" on Yahoo.com, we see that the market cap is at $273.56 million making this a small cap stock. The trailing p/e is at 20.46, but the forward p/e for 2004 is at 13.05. PEG ratio, however, is a bit steep at 2.76, but price/sales is cheap at 0.27.
Yahoo reports 24.67 million shares outstanding with 19.00 million of them that float. Currently there are only 180,000 shares out short representing 0.95% of the float or 3.273 trading days. No dividend is paid and the last stock split reported on Yahoo was a 3:2 in June, 1998.
Technicall, if we check a chart, we can see that the stock was actually heading lower between 2000 and 2003, and then about May, 2003, broke out through a resistance area about $4/share, and has headed higher since.
Overall, I am fairly ambivalent about this particular issue. What concerns me is that although revenue growth has been steady, earnings growth has been erratic. Balance sheet looks ok with recent improvement of free cash flow. PEG is high at over 2.5, but forward p/e isn't that bad. I guess as they say around here "It's a horse apiece". Whatever that means!
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