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What's in the Cards for HCA Healthcare's (HCA) Q2 Earnings?

Zacks Equity Research

HCA Healthcare, Inc. HCA is scheduled to release second-quarter 2019 results on Jul 30. In the last reported quarter, the company delivered a positive earnings surprise of nearly 28.6%, backed by higher admissions and revenues. Moreover, the bottom line shot up 27.5% year over year.

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

The second-quarter results would likely gain from higher admissions, licensed beds, number of hospitals, etc. All these factors have been supporting the company’s earnings for the last few quarters and the trend is likely to continue in the to-be-reported quarter.

The Zacks Consensus Estimate for earnings in the quarter to be reported is pegged at $2.49, indicating an 8.7% increase from the year-ago reported figure.

The Zacks Consensus Estimate for revenues stands at $12.6 billion, up 9.4% from the prior-year reported number. The metric is likely to be boosted by higher admissions in the second quarter. Moreover, the number of hospitals would possibly increase on the back of the company’s strategic moves.

The consensus mark for the total number of hospitals is likely to rise 3.9% from the year-earlier quarter’s reported figure.

The company is expected to have enjoyed volume growth in commercial business as well.

The Zacks Consensus Estimate for second-quarter admissions and equivalent admissions suggests respective growth of 5.3% and 5.9% from the year-ago reported numbers, attributable to the network expansion moves by HCA Healthcare in the second quarter.

The Zacks Consensus Estimate for patient days is also 4.5% up from the year-ago reported number. HCA Healthcare’s total number of licensed beds might be augmented in the June quarter. The Zacks Consensus Estimate for the licensed number of beds is pegged at 48.6 million, implying a 4.2% improvement from the prior-year reported figure.

The company might have been consistent with capital deployment, which should further favor its bottom line in the upcoming quarterly release.

HCA Healthcare has probably witnessed a steady cash flow in the to-be-reported quarter, which has maintained the momentum over the last several quarters.

However, the company might slightly suffer an increase in expenses because of the company’s growth-related investments and operating costs. Higher expenses might have weighed on the company’s margins.

We also expect the company's leverage to persist at elevated levels as it incurs debt to finance its acquisitions.

What the Quantitative Model States

Our proven model conclusively shows that HCA Healthcare is likely to beat on earnings this time around. 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.

Earnings ESP: HCA Healthcare has an Earnings ESP of +8.40%. This is because the Most Accurate Estimate is pegged at $2.70, higher than the Zacks Consensus Estimate of $2.49. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

HCA Healthcare, Inc. Price and EPS Surprise

HCA Healthcare, Inc. Price and EPS Surprise

HCA Healthcare, Inc. price-eps-surprise | HCA Healthcare, Inc. Quote

Zacks Rank: HCA Healthcare sports a Zacks Rank of 1, which increases the predictive power of ESP. Along with a positive ESP in the combination, chances of an earnings beat are significantly higher for the stock this time around.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered 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 medical sector with the perfect mix of elements to also surpass estimates in the next releases are as follows:

Tenet Healthcare Corporation THC is slated to release second-quarter financial figures on Aug 5. The stock has an Earnings ESP of +1.85% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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.

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 numbers on Jul 31.

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Humana Inc. (HUM) : Free Stock Analysis Report
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