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Is a Beat in Store for Molina Healthcare (MOH) Q2 Earnings?

Zacks Equity Research

Molina Healthcare, Inc MOH is scheduled to report second-quarter 2019 results on Jul 30. In the last reported quarter, the company delivered a positive earnings surprise of 26.1%. This upside was driven by decreasing expenses.

Its surprise history is impressive, the average four-quarter beat being 88.2%.

What to Expect for Q2 Earnings

The company’s second-quarter performance is likely to be supported by its strategic divestitures as well as cost-reduction plans. The Zacks Consensus Estimate for earnings is pegged at $2.56, up 13.8% from the year-ago reported figure.

However, the company’s revenues are likely to suffer due to soft premium as well as service revenues. The top line has likely suffered due to lower membership. The Marketplace business is also likely to have endured challenges in the same time frame. The Zacks Consensus Estimate for premium revenues stands at $3.9 million, suggesting a decline of 12.8% from the year-ago reported figure. The Zacks Consensus Estimate for service revenues implies a plunge of 95.5% from the prior-year reported number.

The Zacks Consensus Estimate for total revenues is pegged at $4 billion, indicating a 16.6% drop from the prior-year reported figure.

Medical cost trends are expected to be stable in the quarter to be reported.

However, the company is likely to have witnessed an elevated debt level due to growth-related investments, which remains a concern for the company as it increases financial risk. Interest expenses are also likely to be high.

What the Quantitative Model States

Our proven model conclusively shows that Molina Healthcare is likely to beat on earnings this to-be-reported quarter. This is because the stock has the right combination of a positive Earnings ESPand a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings ESP: Molina Healthcare has an Earnings ESP of +3.02%.This is because both the Most Accurate Estimate is pegged at 2.64%, higher than the Zacks Consensus Estimate of 2.56%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Molina Healthcare, Inc Price and EPS Surprise

Molina Healthcare, Inc Price and EPS Surprise

Molina Healthcare, Inc price-eps-surprise | Molina Healthcare, Inc Quote

Zacks Rank: Molina Healthcare sports a Zacks Rank of 1, which increases the predictive power of ESP. Further, a positive ESP in the combination makes the stock’s chances of beating estimates significantly higher.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the Health Maintenance Organization industry with the perfect combination of elements to also surpass estimates in the next releases are as follows:

Humana Inc. HUM has an Earnings ESP of +1.57% and a Zacks Rank #3. The company is set to report second-quarter earnings on Jul 31.

Mednax, Inc MD has an Earnings ESP of +2.13%. This Zacks #3 Ranked company is set to report second-quarter earnings performance on Aug 1.

Amedisys, Inc. AMED is slated to release second-quarter financial figures on Jul 31. The stock has an Earnings ESP of +1.91% and a Zacks Rank #1.

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Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
 
Humana Inc. (HUM) : Free Stock Analysis Report
 
Mednax, Inc (MD) : Free Stock Analysis Report
 
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