Chemed Corporation (CHE): A Bull Case Theory

We came across a bullish thesis on Chemed Corporation on Stock Analysis Compilation’s Substack. In this article, we will summarize the bulls’ thesis on CHE. Chemed Corporation’s share was trading at $449.42 as of July 21^st. CHE’s trailing and forward P/E were 21.91 and 19.16, respectively according to Yahoo Finance.

Chemed Corp. operates as a uniquely structured holding company with two industry-leading businesses in non-correlated sectors: VITAS Healthcare, the nation’s largest provider of hospice care, and Roto-Rooter, North America’s top plumbing and drain cleaning brand. This combination delivers a resilient and durable compounding model, managed with disciplined operational execution and shareholder-friendly capital allocation.

VITAS anchors the portfolio, benefiting from the predictable, multi-decade demand tailwind of an aging U.S. population. Its scale, clinical expertise, and entrenched referral relationships provide a deep competitive moat, while Medicare’s stable reimbursement framework ensures revenue visibility. Complementing VITAS, Roto-Rooter operates in the essential, recession-resistant plumbing services market, where urgent, non-discretionary demand sustains consistent cash flows.

Nearly a century of brand cultivation has built Roto-Rooter’s powerful market recognition, enabling premium pricing and broad customer loyalty across residential and commercial markets. Its hybrid model of company-owned branches and independent franchises enhances efficiency and geographic reach. Chemed’s strategic advantage lies in its holding structure, which enables each business to pursue operational excellence while the parent focuses on prudent capital allocation.

Reliable cash generation supports a long-standing commitment to returning capital via a steadily rising dividend and opportunistic share repurchases. By pairing a demographically driven healthcare leader with an indispensable services provider, Chemed has created a uniquely durable enterprise with minimal cyclicality.

This design positions the company to sustain growth and compound shareholder value over the long term, underpinned by two robust businesses, high barriers to entry, and a proven management approach that balances operational focus with disciplined capital deployment.

Previously, we covered a bullish thesis on Chemed Corporation (CHE) by 310 Value in April 2025, which highlighted durable earnings, temporary volatility, and disciplined share repurchases as drivers of long-term value. The company’s stock price has depreciated by approximately 23% since our coverage due to near-term headwinds in VITAS and Roto-Rooter. The thesis remains valid, and Stock Analysis Compilation shares a similar view, stressing its durable, non-correlated businesses.

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Disclosure: None.