Is NHC's EPS growth sustainable long-term?

National Healthcare Corporation (NHC) has demonstrated a significant surge in EPS in the third quarter, but the sustainability of this growth long-term is uncertain. Here are the key points to consider:

1. **Recent Performance**: NHC's EPS grew by 301.47% from the same period a year ago, which is a substantial increase. This growth is particularly notable given the decline in Healthcare Facilities industry, indicating NHC's outperformance in a challenging sector.
2. **Growth Rate Analysis**: The 3-year EPS CAGR for NHC is 112.21%, which is quite robust. However, the 3-year Net Income CAGR is 126.06%, and the 3-year Revenue CAGR is 9.73%. The EPS growth rate is significantly higher than the Net Income and Revenue growth rates, suggesting that a large portion of the EPS increase may be driven by factors other than operational efficiency or revenue growth.

3. **Non-Recurring Items**: NHC's EPS growth has been boosted by non-recurring items, such as impairment charges and termination fees to related parties. These items are not indicative of sustainable long-term growth and can fluctuate significantly from period to period.
4. **Industry Challenges**: The healthcare industry, including NHC's segment of healthcare facilities, faces significant challenges such as inflation and increased operating costs. These factors can impact profitability and make it more difficult to sustain high EPS growth.
5. **Strategic Initiatives**: NHC has made strategic acquisitions, such as the White Oak Senior Living Portfolio, which may contribute to future growth. However, the success of these acquisitions in sustaining EPS growth will depend on operational efficiencies and synergies that can be realized.
6. **Financial Health**: NHC's financial statements show a net loss, which increased due to higher operating expenses and impairment charges. The company's net margin is 6.95%, which is relatively low and suggests that a significant portion of revenue is consumed by expenses. This could impact the company's ability to sustain high EPS growth.
7. **Dividend and Shareholder Returns**: NHC has increased its dividend, which is a positive sign for shareholder returns. However, the sustainability of dividends is closely tied to the company's financial health and the need to retain earnings to support operations and growth.

In conclusion, while NHC has experienced a significant increase in EPS, the sustainability of this growth long-term is uncertain. The company's high EPS growth rate is partly driven by non-recurring items and factors outside of operational efficiency and revenue growth. The challenges in the healthcare industry, along with NHC's financial health and the need for sustaining dividends and shareholder returns, suggest that caution is warranted in assessing the long-term sustainability of NHC's EPS growth.