Should You Hold Chemed Stock in Your Portfolio Now?

Chemed Corporation CHE is well poised to grow in the coming quarters due to strong operational growth in the VITAS arm. Roto-Rooter maintains its core competitive edge in a challenging operational environment, which is highly promising. Meanwhile, ongoing macroeconomic headwinds and competitive pressures pose risks for Chemed’s operations.Over the past year, this Zacks Rank #3 (Hold) stock has lost 19% against the industry’s 10.2% growth and the S&P 500 composite’s 22.5% improvement.The renowned hospice care provider has a market capitalization of $6.02 billion. Chemed has an earnings yield of 5.4% compared with the industry’s 5.3% yield. It has an earnings growth rate of 11.6% for 2026 compared to the industry’s 15.2% growth.Let’s delve deeper.Upsides for CHEVITAS Prospects Bright: In the first quarter of 2026, VITAS’ revenues grew 3.1% year over year, driven by a 2.2% increase in days of care and a roughly 2.6% rise in the geographically weighted average Medicare reimbursement rate. Admissions at VITAS during the quarter reached 19,394, representing a 6.9% increase over the prior-year period. Hospital-based admissions accounted for 43.8% of total admissions. Strengthened admissions led VITAS to outperform internal projections and add more than $32.5 million to the Florida combined program’s cap cushion. Roto-Rooter Shows Resilience:  In the first quarter of 2026, Roto-Rooter showed signs of improvement across multiple fronts, with residential plumbing and residential sewer and drain revenues increasing for the first time since the fourth quarter of 2022. Roto-Rooter is centralizing water restoration billing and collections that were historically performed at each branch. The project is expected to create more concentrated expertise and result in better billing and collection results. In the first quarter, the transition resulted in a $1.5 million improvement in overall write-offs compared with the prior-year period. Management remains confident that the strategic initiatives discussed over the last few quarters are starting to take hold.On March 31, 2026, Roto-Rooter purchased the territory and assets of the franchises operating in San Francisco, CA, and Fort Worth, TX, aggregating to roughly $20.6 million. Concerns for ChemedMacroeconomic Headwinds: Chemed is actively monitoring the macroeconomic trends, such as inflation, and the effects of implemented or potential tariffs, which may adversely impact its net sales and profitability. Significant tariffs on certain products, such as steel for Roto-Rooter’s cabling machines and pharmaceuticals utilized by VITAS, could materially increase the cost of both segments. For 2025, Chemed’s cost of services provided and goods sold increased 8.2% over 2024.Image Source: Zacks Investment ResearchTough Competitive Landscape: Roto-Rooter operates in the highly competitive market for sewer, drain, and pipe cleaning and plumbing repair businesses. Competition is fragmented in most markets, with local and regional firms providing much of the competition. Besides, Hospice care in the United States is competitive, as programs for hospice services are generally uniform. As the hospice care industry is highly fragmented, VITAS competes with a large number of organizations based on its ability to deliver quality, responsive services. Both these segments could face challenges in their operations if they are unable to innovate and effectively respond to market trends.CHE’s Estimate TrendThe Zacks Consensus Estimate for Chemed’s 2026 earnings per share (EPS) has remained constant at $24.05 in the past 30 days.The Zacks Consensus Estimate for the company’s 2026 revenues is pegged at $2.69 billion, suggesting a 6.2% rise from the year-ago reported number.Key MedTech StocksSome better-ranked stocks in the broader medical space are Globus Medical GMED, Integra LifeSciences IART and Phibro Animal Health PAHC. Globus Medical has an earnings yield of 5.5%, well ahead of the industry’s negative 3% yield. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 26.3%. The company’s shares have rallied 43.8% against the industry’s 4.8% decline over the past year.GMED carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Integra LifeSciences, carrying a Zacks Rank #2 at present, has an earnings yield of 16% against the industry’s negative 3% yield. Shares of the company have gained 22.8% compared with the industry’s 4.8% growth. IART’s earnings topped estimates in each of the trailing four quarters, the average surprise being 16.8%.Phibro Animal Health, carrying a Zacks Rank #2 at present, has an earnings yield of 9.2% compared with the industry’s 2.8% yield. Shares of the company have climbed 43.1% against the industry’s 27.9% decline. PAHC’s earnings beat estimates in each of the trailing four quarters, the average surprise being 16.3%.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks