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Tenet Healthcare (THC) Q2 Earnings: What's in the Cards?

Zacks Equity Research

Tenet Healthcare Corporation THC will report second-quarter 2019 results on Aug 5, after market close. In the last reported quarter, it delivered adjusted net earnings of 54 cents per share, outperforming the Zacks Consensus Estimate by 80%.

Let’s see how things are shaping up prior to this announcement:

We expect to see a year over year decline in revenues, due to lower number of licensed beds. Number of licensed beds are expected to decrease due to the company's divestitures. The consensus mark for the number of average licensed beds implies a 6.2% fall from the year-ago reported number. The consensus estimate for revenues is pegged at $4.4 billion, suggesting a dip of 0.5% from the year-ago period.

Revenues of Ambulatory Care and Conifer are likely to suffer in the second quarter.

The Zacks Consensus Estimate for earnings stands at 44 cents, indicating a decline of 10.2% from the prior-year reported figure.
 
Nevertheless, adjusted patient days are expected to improve marginally in the second quarter. The Zacks Consensus Estimate for the same indicates a 0.8% uptick from the year-earlier reported figure.

The second quarter is expected to take a beating due to increased malpractice, which was earlier projected by the company.

Overdependence on debt for growth-related investments might persistently increase the financial risk for Tenet Healthcare.

What the Quantitative Model States

Our proven model does not conclusively show that Tenet 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 ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here.

Earnings ESP: Tenet Healthcare has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 44 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Tenet Healthcare Corporation Price and EPS Surprise

Tenet Healthcare Corporation Price and EPS Surprise

Tenet Healthcare Corporation price-eps-surprise | Tenet Healthcare Corporation Quote

Zacks Rank: Tenet Healthcare carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult for the stock this reporting cycle.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the same space with the right combination of elements to also beat estimates this time around are as follows:

Opexa Therapeutics, Inc. ACER is slated to release second-quarter earnings figures on Aug 12. The stock has an Earnings ESP of +29.61% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Adverum Biotechnologies, Inc. ADVM has an Earnings ESP of +14.75%. This #3 Ranked company is set to report second-quarter financial numbers on Aug 8.

BioLineRx Ltd. BLRX is scheduled to announce second-quarter 2019 earnings performance on Aug 6. The stock has an Earnings ESP of +15.36% and is a Zacks #3 Ranked player.

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