Anthem, Inc. ANTM is well-poised for development on the back of its consistent strong operating performance, inorganic growth strategy and a solid balance sheet.
Over the past 30 days, the company’s earnings estimates for 2019 and 2020 have been revised 0.1% and 0.9% upward, respectively. This in turn, reflects analysts' optimism on the stock.
The company flaunts a commendable earnings surprise history, having outpaced the Zacks Consensus Estimate in the trailing four reported quarters, the average being 7.04%. This trend of consecutive estimate beats vouches for the company’s operating efficiency.
The company is well-placed for growth, evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Anthem recently delivered fourth-quarter earnings of $2.44 per share, driven by a solid operating performance and increased contribution across all core businesses. Its operating revenues logged $23.3 billion, aided by higher premium rates and the return of the health insurance tax in 2018 along with Medicare growth.
Moreover, the company has been witnessing a healthy top-line for the past several quarters. This upside is evident from its 5-year CAGR of 4.88% (2013-2018). Given its strong fundamentals such as strategic initiatives, the company’s top line is expected to steadily rise in the upcoming quarters as well.
Anthem has been actively collaborating with companies and acquiring the same for enhancing its expansion process. The company’s buyout of HealthSun and America's 1st Choice has helped it solidify its revenues. Acquisitions have always fueled the company’s Medicare Advantage growth. Anthem has also purchased Aspire Health, which has widened its clinical capabilities.
The company’s capital deployment also impresses investors. Its strong capital and cash position have driven consistent dividend payouts and stock repurchases. The company initiated cash dividends in early 2011 and has raised the same by about 200% from 2011 to 2018. It has also been aggressively engaged in share buybacks, utilizing its excess capital to boost shareholder value. The company’s cash flow from operations remains encouraging too. The metric witnessed a CAGR of 4.54% from 2013 to 2018.
The Zacks Consensus Estimate for current-year earnings per share is pegged at $19.13, representing a year-over-year increase of 20.4% on 9.5% higher revenues of $99.9 billion.
For 2020, the Zacks Consensus Estimate for earnings stands at $22.03 on $108.18 billion revenues, translating into respective 15.2% and 8.2% year-over-year growth.
The long-term earnings growth rate is expected at 13.8%, above the industry’s average of 12.7%, which is an upside for the company.
Shares of this Zacks Rank #1 (Strong Buy) company have rallied 28.7% in a year's time, outperforming its industry’s rise of 9.3%.
Other Stocks to Consider
Investors interested in the medical sector can also take a look at some other top-ranked stocks like UnitedHealth Group Incorporated UNH, Centene Corporation CNC and WellCare Health Plans, Inc. WCG, each currently carrying a Zacks Rank #2 (Buy). You can see
UnitedHealth, a diversified health care company, has surpassed earnings estimates in each of the four reported quarters, with an average positive surprise of 3.39%.
Centene, a diversified and multi-national healthcare enterprise has come up with an average earnings surprise of 4.99% in the trailing four reported quarters.
WellCare Health offers managed care services to government-sponsored health care programs. The company pulled off average positive surprise of 15.43% in the preceding four reported quarters.
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