A month has gone by since the last earnings report for Mednax (MD). Shares have lost about 12.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Mednax due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
MEDNAX Q1 Earnings Miss Estimates, Decline Y/Y
MEDNAX reported first-quarter 2019 adjusted earnings of 65 cents per share, missing the Zacks Consensus Estimate by 8.5%. Moreover, the bottom line decreased 27% year over year due to a rise in expenses and lower revenues.
The company generated revenues of $851.18 million, lagging the Zacks Consensus Estimate by 5.9%. Also, the top line was down 0.2% from the year-ago period.
General and administrative expenses inched up 0.1% to $101 million.
Interest expenses of the company escalated 54.3% to $30.7 million, primarily due to higher effective interest rate on borrowings between the two periods.
In the quarter under review, adjusted EBITDA totaled $104.9 million, down by nearly 14.3%.
As of Mar 31, 2019, the company had cash and cash equivalents of about $46.5 million, down 2.2% from the level as of 2018 end.
The company incurred total debt of $2.1 billion, up 7.3% from the level as of Dec 31, 2018, and total assets of $5.7 billion, down 3.9% from the figure at 2018 end.
It used $60.4 million to fund operations in the first three months of 2019, down 48.3% year over year.
The company bought back shares worth $79 million in the first three months of 2019.
For the second quarter of 2019, the company expects adjusted EPS in the band of 84-92 cents, up from the previous guidance of 67-75 cents. MEDNAX projects adjusted EBITDA in the range of 125-$135 million, up from the past forecast of $108-$118 million.
This guidance assumes total same-unit revenue growth for the second quarter of 2019 from flat to 2% as compared to the prior-year period’s level.
2019 Guidance Revised
The company now estimates adjusted EBITDA within $505-$535 million, down from the earlier prediction of $550-$580 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -9.42% due to these changes.
At this time, Mednax has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Mednax has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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