Why Acadia Healthcare (ACHC) Stock Is Spiking On Tuesday

NEW YORK (TheStreet) -- Shares of Acadia Healthcare Company Inc. (ACHC) are higher by 14.47% to $48.12 Tuesday on heavy trading volume.

The company announced today that it reached an agreement to purchase Partnerships in Care for $660 million.

Acadia, a provider of inpatient behavioral healthcare services, said it expects the transaction to add to its 2014 earnings by approximately 17 cents to 20 cents per diluted share.

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Partners in Care is the second largest provider of inpatient behavioral healthcare services in the U.K.

Separately, TheStreet Ratings team rates ACADIA HEALTHCARE CO INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ACADIA HEALTHCARE CO INC (ACHC) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ACHC's revenue growth has slightly outpaced the industry average of 16.8%. Since the same quarter one year prior, revenues rose by 24.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ACADIA HEALTHCARE CO INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ACADIA HEALTHCARE CO INC increased its bottom line by earning $0.86 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($1.29 versus $0.86).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 249.3% when compared to the same quarter one year prior, rising from $3.74 million to $13.06 million.
  • Net operating cash flow has significantly increased by 4298.80% to $7.35 million when compared to the same quarter last year. In addition, ACADIA HEALTHCARE CO INC has also vastly surpassed the industry average cash flow growth rate of 37.05%.
  • Powered by its strong earnings growth of 225.00% and other important driving factors, this stock has surged by 30.10% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • You can view the full analysis from the report here: ACHC Ratings Report
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