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What's in the Offing for Anthem's (ANTM) Earnings in Q2?

Zacks Equity Research

Anthem Inc. ANTM will release second-quarter 2019 results on Jul 24 before market open. In the first quarter of 2019, the company delivered a positive earnings surprise of 2.9%, driven by higher membership and the expansion of its clinical and specialty services.

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

The company’s performance in the to-be-reported quarter is likely to be supported by a robust operating performance and strength displayed at all its businesses. Membership of the company is also expected to improve in the same time frame. The Zacks Consensus Estimate for earnings is pegged at $4.61, up 8.5% from the year-ago reported figure.

Its top line is also likely to continue its winning streak on the back of its Government business and Commercial & Specialty Business segments. The Zacks Consensus Estimate for second-quarter revenues stands at $24.7 billion, up 8.7% from the prior-year reported number.

The consensus mark for revenues in the Commercial Business segment and the Government business indicates a respective 15% and 9.2% rise from the year-earlier reported figures.

Increase in membership is projected in Medicare business as the company is focusing on growing this line of business.

Total medical membership for the quarter to be reported is likely to burgeon owing to the company’s constant efforts to boost its portfolio. The Zacks Consensus Estimate for medical enrollment implies an improvement of 3.6% from the year-ago reported figure.

The second quarter has possibly witnessed a steady cash flow in the company. Moreover, Anthem is anticipated to have continued enhancing its shareholder value through a disciplined capital deployment.

However, we predict an elevated selling, general and administrative expense ratio as Anthem escalates investment in areas, such as technology modernization, population and consumer digital health plus data analytics and product development capabilities.

Also, its overdependence on debt might persist to weigh down the margins.

What the Quantitative Model States

Our proven model conclusively shows that Anthem 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: Anthem has an Earnings ESP of +0.73%. This is because the Most Accurate Estimate is pegged at $4.64, higher than the Zacks Consensus Estimate of $4.61. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. price-eps-surprise | Anthem, Inc. Quote

Zacks Rank: Anthem carries a Zacks Rank #3, 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 reporting cycle.

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 Health Maintenance Organization industry with the perfect combination of elements to also surpass estimates in the next releases are as follows:

WellCare Health Plans, Inc. WCG is set to report second-quarter 2019 earnings on Jul 30. The stock has an Earnings ESP of +1.65% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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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Anthem, Inc. (ANTM) : Free Stock Analysis Report
 
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