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What to Expect for Universal Health's (UHS) Q2 Earnings

Zacks Equity Research

Universal Health Services, Inc. UHS is set to report second-quarter 2019 results on Jul 25 after market close. In the last reported quarter, the company reported adjusted earnings of $2.45 per share, missing the Zacks Consensus Estimate by 5.8%.

For the to-be-reported quarter, the Zacks Consensus Estimate for earnings is pegged at $2.49, up 0.8% from the year-ago reported figure.

So, let’s see how things are shaping up for this announcement.

In the second quarter of 2019, the company’s performance is likely to have been fueled by both its Acute Care and Behavioral Health segments. The Zacks Consensus Estimates for net revenues at its Acute Care and Behavioral Health segments implies an upside of 4.8% and 4.5%, respectively, from the prior-year reported numbers.

The Zacks Consensus Estimate for total revenues in the second quarter stands at $2.8 billion, indicating growth of 4.8% from the year-earlier reported figure.

Licensed beds in both Acute Care hospitals and the Behavioral Health centers, which have been increasing since 2012, are expected to maintain the momentum in second-quarter results as well. The Zacks Consensus Estimate for average licensed beds at Behavioral Health Centers suggests a 2.3% rise from the year-ago reported number. Also, the Zacks Consensus Estimate for average licensed beds at Acute Care Hospitals in the United States and Puerto Rico indicates an increase of 1.9% from the prior-year reported figure.

Higher bed count is owing to the addition of facilities in the second quarter.

Further, this solid bed count is expected to have aided admissions across both Acute Care and Behavioral Health segments during the quarter.

Universal Health might have consistently enhanced its shareholder value in the period under review.

However, Universal Health is anticipated to have incurred escalating operating expenses due to higher salaries, wages and benefits plus other operating expenses, which could negatively impact second-quarter earnings.

Moreover, its long-term debt, which has been piling up since 2013 (dipped to some extent in the first quarter of 2019), might have deteriorated further. Interest expenses of the company might also remain at elevated levels.

What the Quantitative Model States

Our proven model does not conclusively show that Universal Health is likely to beat on earnings this reporting cycle. This is because the stock needs to have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Universal Health has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at $2.49. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Universal Health Services, Inc. Price and EPS Surprise

Universal Health Services, Inc. Price and EPS Surprise

Universal Health Services, Inc. price-eps-surprise | Universal Health Services, Inc. Quote

Zacks Rank: Universal Health carries a Zacks Rank #4 (Sell). We caution against the Sell-rated stocks (4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the medical sector with the perfect mix of elements to surpass estimates in the next releases are as follows:

WellCare Health Plans, Inc. WCG is set to report second-quarter earnings on Jul 30. The stock has an Earnings ESP of +1.65% and a Zacks Rank #3.

Molina Healthcare, Inc MOH is set to report second-quarter earnings on Jul 29. The stock has a Zacks Rank of 1 and an Earnings ESP of +3.02%.

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

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