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HCA Healthcare (HCA) to Report Q1 Earnings: What's in Store?
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HCA Healthcare, Inc. (HCA - Free Report) is scheduled to release first-quarter 2018 results on May 1.
Higher flu-related volumes combined with the anticipated benefits from the income tax reform should support HCA Healthcare’s results. The company should see an earnings upside from favorable exchange rates.
However, the company’s first-quarter results are expected to suffer from industry-wide softness in volumes. Factors like payor initiatives to move volumes away from hospitals, rising deductibles and the prevalence of high deductible health plans, and an increased proportion of hospital care to be paid by consumers are likely to lower volumes.
As result of the recent passage of the Tax Cuts and Jobs Act, we currently estimate the company's effective tax rate in 2018 at 25%, and reduction in cash taxes in 2018 of approximately $500 million.
With respect to workforce development, the company is undergoing investments of approximately $300 million in four important areas that will continue for the next few years. Though these initiatives will create better opportunities for career growth and capabilities to serve patients, these costs will weigh on the bottom line before generating profits.
The company’s revenues have been rising over the past few years on the back of accretive acquisition of other hospitals and we expect the trend to continue in the first quarter. The number of hospitals in the first quarter, per the Zacks Consensus Estimate, is 179, up from 171 in the year-ago quarter. An increase in the number of hospitals should also drive admissions volume growth. Per the Zacks Consensus Estimate, total admissions should be up 3.5% year over year.
The company has been deploying capital in terms of share repurchases to enhance investors’ value. Share buyback programs taken up during the first quarter are likely to favor the bottom line, limiting the share count.
Earnings Surprise
The company beat earnings estimate in one of the trailing four reported quarters and missed in two. However, the company delivered an average positive surprise of 2.23%. This is depicted in the chart below:
Our proven model does not conclusively show that HCA Healthcare is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: HCA Healthcare has an Earnings ESP of -2.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: HCA Healthcare carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Zacks Rank and Other Stocks
Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Humana Inc. (HUM - Free Report) is expected to report first-quarter 2018 earnings results on May 2. The company has an Earnings ESP of +0.20% and a Zacks Rank #2 (Buy).
WellCare Health Plans, Inc. has an Earnings ESP of +3.15% and a Zacks Rank #2. The company is expected to report first-quarter earnings results on May 1.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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HCA Healthcare (HCA) to Report Q1 Earnings: What's in Store?
HCA Healthcare, Inc. (HCA - Free Report) is scheduled to release first-quarter 2018 results on May 1.
Higher flu-related volumes combined with the anticipated benefits from the income tax reform should support HCA Healthcare’s results. The company should see an earnings upside from favorable exchange rates.
However, the company’s first-quarter results are expected to suffer from industry-wide softness in volumes. Factors like payor initiatives to move volumes away from hospitals, rising deductibles and the prevalence of high deductible health plans, and an increased proportion of hospital care to be paid by consumers are likely to lower volumes.
As result of the recent passage of the Tax Cuts and Jobs Act, we currently estimate the company's effective tax rate in 2018 at 25%, and reduction in cash taxes in 2018 of approximately $500 million.
With respect to workforce development, the company is undergoing investments of approximately $300 million in four important areas that will continue for the next few years. Though these initiatives will create better opportunities for career growth and capabilities to serve patients, these costs will weigh on the bottom line before generating profits.
The company’s revenues have been rising over the past few years on the back of accretive acquisition of other hospitals and we expect the trend to continue in the first quarter. The number of hospitals in the first quarter, per the Zacks Consensus Estimate, is 179, up from 171 in the year-ago quarter. An increase in the number of hospitals should also drive admissions volume growth. Per the Zacks Consensus Estimate, total admissions should be up 3.5% year over year.
The company has been deploying capital in terms of share repurchases to enhance investors’ value. Share buyback programs taken up during the first quarter are likely to favor the bottom line, limiting the share count.
Earnings Surprise
The company beat earnings estimate in one of the trailing four reported quarters and missed in two. However, the company delivered an average positive surprise of 2.23%. This is depicted in the chart below:
HCA Healthcare, Inc. Price and EPS Surprise
HCA Healthcare, Inc. Price and EPS Surprise | HCA Healthcare, Inc. Quote
Here is what our quantitative model predicts:
Our proven model does not conclusively show that HCA Healthcare is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: HCA Healthcare has an Earnings ESP of -2.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: HCA Healthcare carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Zacks Rank and Other Stocks
Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Humana Inc. (HUM - Free Report) is expected to report first-quarter 2018 earnings results on May 2. The company has an Earnings ESP of +0.20% and a Zacks Rank #2 (Buy).
Molina Healthcare, Inc. (MOH - Free Report) is expected to report first-quarter earnings results on Apr 30. It has an Earnings ESP of +6.8% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
WellCare Health Plans, Inc. has an Earnings ESP of +3.15% and a Zacks Rank #2. The company is expected to report first-quarter earnings results on May 1.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>