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Why You Should Add HCA Healthcare (HCA) to Your Portfolio Now

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HCA Healthcare, Inc. (HCA - Free Report) is aided by growing patient admissions, acquisitions of healthcare facilities, an effective virtual care services suite and a notable financial stand.

Zacks Rank & Price Performance

HCA currently sports a Zacks Rank #1 (Strong Buy).

The stock has gained 37.1% in the past year.  

Zacks Investment Research
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Favorable Style Score

HCA Healthcare carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results have shown so far that stocks with a favorable Value Score in combination with a solid Zacks Rank are the best investment bets.

Robust Prospects

The Zacks Consensus Estimate for HCA’s 2024 earnings is pegged at $22.20 per share, indicating growth of 16.8% from the prior-year reported figure. The consensus mark for revenues is $70.8 billion, which implies an improvement of 8.9% from the year-ago figure.

The consensus estimate for 2025 earnings is pegged at $24.55 per share, indicating growth of 10.6% from the 2024 estimate. The consensus mark for revenues is $74.3 billion, which implies an improvement of 4.9% from the 2024 estimate.

Decent Earnings Surprise History

HCA’s bottom line outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 8.24%.

Solid Return on Equity

Return on equity in the trailing 12 months is significantly higher than the industry’s average for HCA Healthcare. This substantiates the company’s efficiency in utilizing shareholders’ funds.

A Strong View for 2024

HCA forecasts revenues to be within the range of $69.8-$71.8 billion this year, the midpoint of which indicates 8.9% growth from the 2023 reported figure.  

Earnings per share are anticipated between $21.60 and $22.80, the midpoint of which indicates an improvement of 17% from the 2023 level.

Key Business Tailwinds

HCA Healthcare's top line is driven primarily by increased patient volumes, which are critical to revenues for any healthcare facility operator. The company saw a 6.4% year-over-year increase in admissions during the first half of 2024. The resumption of deferred elective procedures is expected to bring more patients to HCA's surgery centers, potentially leading to higher inpatient occupancy rates and consequently boosting revenues. 

The rise in emergency room visits, which increased 6.5% year over year in the first half of 2024, is likely to further support revenue growth. HCA also operates psychiatric hospitals to address the growing incidence of mental health issues in the United States. It operated 188 hospitals and roughly 2,400 ambulatory sites of care across 20 states and the United Kingdom as of Jun 30, 2024.

HCA has expanded its healthcare portfolio through strategic acquisitions over the years, thereby enhancing its capabilities and strengthening its national footprint. In the first half of 2024, the company spent $131 million on acquiring hospitals and healthcare entities.

The company also offers a robust virtual care services suite, allowing patients, including those in rural areas with limited healthcare access, to receive care from their homes. Additionally, HCA has leveraged technology to standardize care in cell therapy programs.

HCA's strong financial position, underscored by substantial cash reserves and strong cash generation abilities, supports its business investments. The company generated $4.4 billion in operating cash flows in the first half of 2024, marking a 3.8% increase from the prior-year comparable period. 

This financial strength also enables HCA to return value to shareholders through share buybacks and dividends, with management approving a 10% increase in the quarterly dividend in January 2024.

Other Stocks to Consider

Other top-ranked stocks in the Medical space are DaVita Inc. (DVA - Free Report) , LeMaitre Vascular, Inc. (LMAT - Free Report) and Universal Health Services, Inc. (UHS - Free Report) , each currently sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita’s earnings surpassed estimates in each of the last four quarters, the average surprise being 24.24%. The Zacks Consensus Estimate for DVA’s 2024 earnings indicates an improvement of 16.9% from the prior-year actual. The consensus mark for revenues indicates a rise of 5.4% from the year-ago actual. The consensus mark for DVA’s earnings has moved 2.9% north in the past 30 days. 

LeMaitre Vascular’s earnings beat estimates in each of the trailing four quarters, the average surprise being 8.87%. The Zacks Consensus Estimate for LMAT’s 2024 earnings indicates an improvement of 37% from the prior-year actual. The consensus estimate for revenues implies an improvement of 13% from the year-ago actual. The consensus mark for LMAT’s earnings has moved 4.5% north in the past 30 days.

The bottom line of Universal Health outpaced estimates in each of the trailing four quarters, the average surprise being 14.58%. The Zacks Consensus Estimate for UHS’ 2024 earnings indicates an improvement of 51% from the prior-year actual. The same for revenues implies an improvement of 9.8% from the year-ago actual. The consensus mark for UHS’ earnings has moved 15% north in the past 30 days.

Shares of DaVita, LeMaitre Vascular and Universal Health have gained 45.7%, 54.8% and 78.2%, respectively, in the past year.

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