Chemed Corporation
CHE
$534.88
-0.15%
Chemed Corporation operates in the healthcare and home services sectors through its two primary segments: VITAS, which provides hospice and palliative care, and Roto-Rooter, which offers plumbing and drain cleaning services. As a diversified holding company, Chemed holds a unique market position by combining a leading hospice care provider with a well-known home services brand, allowing it to generate stable cash flows from both recession-resistant and demographics-driven businesses. The current investor narrative centers on the company's ability to sustain growth amid a challenging regulatory environment for hospice care, while also benefiting from strong demand for its Roto-Rooter services. Recent news highlights include an expanded $300 million share repurchase authorization and a quarterly dividend increase, underscoring management's confidence in cash generation and shareholder returns.…
CHE
Chemed Corporation
$534.88
Related headlines
Investment Opinion: Should I buy CHE Today?
Based on the analysis, Chemed is rated a Hold. The company offers a defensive profile with a low beta of 0.511, strong profitability (ROE 27.1%), and a shareholder-friendly capital allocation policy, but the flat revenue growth and limited upside to analyst targets (average $552, implying 3.2% upside) cap the near-term potential. The consensus recommendation is 'none' (mixed), reflecting the lack of clear conviction among analysts.
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CHE 12-Month Price Forecast
The AI assessment is neutral with medium confidence, reflecting the balanced risk/reward profile. Chemed's defensive nature and strong profitability are offset by flat revenue growth and limited upside to analyst targets. The stock appears fairly valued, with the forward PE suggesting modest earnings growth that may not materialize given the recent trend. To upgrade to a bullish stance, we would need to see evidence of accelerating revenue growth, such as VITAS admissions increasing by more than 5% and Roto-Rooter revenue growth above 3%. Conversely, a downgrade to bearish would occur if revenue declines for two consecutive quarters or if regulatory changes negatively impact margins.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Chemed Corporation's 12-month outlook, with a consensus price target around $552.00 and implied upside of +3.2% versus the current price.
Average Target
$552.00
0 analysts
Implied Upside
+3.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$520 - $590
Analyst target range
Chemed has coverage from 4 analysts, with a consensus recommendation of 'none' (mixed), and an average target price of $552.00, implying a modest upside of 3.2% from the current price of $534.88. The target range spans from $520.00 (low) to $590.00 (high), with the high target suggesting a 10.3% upside, while the low target implies a -2.8% downside. Recent ratings actions have been mixed, with RBC Capital downgrading from Outperform to Sector Perform in February 2026, and Jefferies downgrading from Buy to Hold in January 2026, indicating some caution among analysts. The relatively narrow target range suggests moderate conviction, but the recent downgrades may signal growing concerns about growth prospects.
Bulls vs Bears: CHE Investment Factors
Chemed presents a mixed investment case with strong defensive characteristics, solid profitability, and a shareholder-friendly capital allocation policy, but faces challenges from flat revenue growth and recent analyst downgrades. The bull case is supported by the company's low beta, high ROE, and robust cash generation, while the bear case highlights the lack of top-line growth and limited upside to analyst targets. Currently, the bearish evidence is slightly stronger due to the stagnant revenue and negative PEG ratio, but the company's stability and capital returns provide a floor. The most critical tension is whether Chemed can reignite revenue growth, particularly in its VITAS segment, to justify its forward PE and unlock upside to the high target of $590.
Bullish
- Strong Shareholder Returns: Chemed has authorized an additional $300 million for stock repurchases and increased its quarterly dividend to $0.60, demonstrating robust cash generation and a commitment to returning capital to shareholders. The payout ratio is only 11.9%, leaving ample room for future increases.
- Defensive Business Profile: With a beta of 0.511, Chemed is significantly less volatile than the market, providing a defensive anchor in portfolios. The Roto-Rooter segment offers recession-resistant demand for essential home services, while VITAS benefits from demographic tailwinds in hospice care.
- Solid Profitability Metrics: Chemed maintains strong profitability with a trailing PE of 23.2x and a forward PE of 19.4x, indicating expected earnings growth. The company's ROE is 27.1% and ROA is 13.5%, reflecting efficient capital deployment and operational effectiveness.
- Healthy Balance Sheet: The company has a low debt-to-equity ratio of 0.158, indicating minimal leverage and financial stability. This conservative capital structure supports continued investment in growth initiatives and shareholder returns without excessive risk.
Bearish
- Flat Revenue Growth: Chemed's most recent quarter (Q4 2025) reported revenue of $639.3 million, a year-over-year decline of -0.1%. Over the past four quarters, revenue has been flat to slightly declining, ranging from $618.8 million to $646.9 million, indicating a lack of top-line growth.
- Analyst Downgrades: Recent ratings actions have been negative, with RBC Capital downgrading from Outperform to Sector Perform in February 2026 and Jefferies downgrading from Buy to Hold in January 2026. These downgrades suggest growing caution among analysts about the company's growth prospects.
- Limited Upside to Targets: The average analyst target price is $552.00, implying only a 3.2% upside from the current price of $534.88. The low target of $520.00 suggests a potential downside of -2.8%, indicating that the stock may be fairly valued or slightly overvalued at current levels.
- Negative PEG Ratio: The PEG ratio is -2.78, which is unusual and signals that the market expects negative earnings growth, contradicting the forward PE's implied growth. This discrepancy suggests that the market may be pricing in a turnaround that has not yet materialized.
CHE Technical Analysis
Chemed's stock has demonstrated a robust recovery over the past year, with a 1-year price change of +17.4%, currently trading at $534.88, which is approximately 96% of its 52-week range (low: $365.21, high: $557.00). This positioning near the upper end of the range indicates strong momentum and investor confidence, though it also suggests the stock may be approaching overbought conditions. The stock's beta of 0.511 indicates it is significantly less volatile than the broader market, making it a defensive choice for investors seeking stability.
Beta
0.51
0.51x market volatility
Max Drawdown
-23.0%
Largest decline past year
52-Week Range
$365-$557
Price range past year
Annual Return
+17.4%
Cumulative gain past year
| Period | CHE Return | S&P 500 |
|---|---|---|
| 1m | +6.1% | +1.9% |
| 3m | +21.7% | +2.3% |
| 6m | +12.5% | +10.6% |
| 1y | +17.4% | +19.5% |
| ytd | +26.2% | +11.8% |
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CHE Fundamental Analysis
Chemed's revenue trajectory has been relatively stable, with the most recent quarter (Q4 2025) reporting revenue of $639.3 million, a slight year-over-year decline of -0.1%. Over the past four quarters, revenue has ranged from $618.8 million to $646.9 million, showing a flat to slightly declining trend. The VITAS segment contributed $429.9 million in revenue, while Roto-Rooter added $231.6 million, with VITAS being the primary growth driver. This stability is notable in a healthcare sector often subject to reimbursement volatility, but the lack of growth may limit upside potential.
Quarterly Revenue
$639337000.0B
2025-12
Revenue YoY Growth
-0.1%
YoY Comparison
Gross Margin
32.2%
Latest Quarter
Free Cash Flow
$325477000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CHE Overvalued?
Given Chemed's positive net income, the PE ratio is the most appropriate valuation metric. The trailing PE is 23.2x, while the forward PE is 19.4x, indicating that the market expects earnings growth. The gap between trailing and forward PE suggests an anticipated earnings increase of approximately 16% over the next year, which is optimistic given the recent flat revenue trend. This forward multiple implies a PEG ratio of -2.78 (based on negative growth expectations), which is unusual and may signal that the market is pricing in a turnaround that has not yet materialized.
PE
23.2x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 20x~38x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include Chemed's flat revenue trend, with Q4 2025 revenue declining 0.1% YoY, and a negative PEG ratio of -2.78, indicating potential earnings contraction. The company's net margin of 10.5% and operating margin of 13.4% are respectable, but any further margin compression could pressure earnings. Additionally, the low payout ratio of 11.9% suggests that dividends are safe, but the reliance on buybacks for shareholder returns may not be sustainable if cash flow weakens. The debt-to-equity ratio of 0.158 is low, but the current ratio of 1.05 indicates tight liquidity, which could be a concern if cash generation falters.
FAQ
The key risks for Chemed include: (1) Regulatory risk in the hospice care segment, where changes in Medicare reimbursement could compress margins and reduce profitability; (2) Revenue stagnation, as evidenced by the -0.1% YoY growth in Q4 2025, which could lead to earnings disappointment and a de-rating; (3) Competitive risk from other hospice providers and home services companies, which could pressure market share; and (4) Macroeconomic risk, as a recession could impact Roto-Rooter's demand, although the low beta of 0.511 provides some cushion. The most severe risk is a combination of regulatory cuts and revenue decline, which could push the stock down to its 52-week low of $365.21, a -31.7% downside from the current price.
The 12-month forecast for Chemed is mixed, with a base case probability of 50% for a target range of $520-$560, aligning with the average analyst target of $552. The bull case, with a 25% probability, sees the stock reaching $560-$590, driven by a resurgence in VITAS growth and favorable regulatory changes. The bear case, also with a 25% probability, could see the stock decline to $400-$450 if regulatory cuts and revenue stagnation persist. The most likely scenario is the base case, where the stock trades in a narrow range with modest upside. Investors should monitor quarterly earnings for signs of revenue acceleration or deterioration to adjust their expectations.
Chemed's valuation is mixed. The trailing PE of 23.2x is slightly above the market average, but the forward PE of 19.4x suggests the market expects earnings growth. The PEG ratio of -2.78 is negative, indicating that the market may be pricing in a decline in earnings, which is unusual. Compared to its own history, the stock is trading near the upper end of its 52-week range, suggesting it may be fairly valued to slightly overvalued. The PS ratio of 2.43x and EV/EBITDA of 14.8x are reasonable for a healthcare services company. Overall, the stock appears fairly valued, with the market pricing in stable but not spectacular growth. If revenue growth fails to materialize, the stock could be considered overvalued at current levels.
Chemed is a reasonable buy for investors seeking a defensive, income-generating stock with low volatility. The stock offers a dividend yield of 0.51% and a low beta of 0.511, making it a stable addition to a diversified portfolio. However, the upside is limited, with the average analyst target implying only 3.2% appreciation from the current price of $534.88. The main risk is the flat revenue growth, which could lead to earnings disappointment and a decline toward the 52-week low of $365.21. For long-term investors with a horizon of 3-5 years, the stock could provide steady returns through dividends and modest capital appreciation, but it may not outperform the broader market in a strong bull run.
Chemed is more suitable for long-term investment due to its defensive characteristics and stable cash flows. The low beta of 0.511 and consistent dividend make it a good fit for conservative investors with a horizon of 3-5 years or more. Short-term trading may be less rewarding given the limited upside to analyst targets and the stock's low volatility, which reduces the potential for quick gains. The company's focus on shareholder returns through buybacks and dividends provides a steady income stream, but the lack of revenue growth limits capital appreciation. For long-term investors, the stock could provide a reliable return of 5-8% annually through dividends and modest price appreciation, making it a solid core holding in a diversified portfolio.