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Humana (HUM) Gears up for Earnings in Q1: What to Expect

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Humana Inc.’s (HUM - Free Report) first-quarter 2020 results are scheduled to be reported on Apr 29, 2020.

Factors to Impact Q1 Results

The to-be-reported quarter’s earnings report is likely to reflect better revenues.

The Zacks Consensus Estimate for earnings is pegged at $4.83, indicating an increase of 7.8% from the year-ago reported figure.

During the last earnings call, management expected the first quarter of 2020 to contribute to more than 24% of its annual earnings ($18.25-$18.75), accounting for $4.44, considering the midpoint.

The company’s top line is likely to have witnessed an upside in the first quarter owing to higher premiums and its strong Medicaid and Medicare lines of businesses. The consensus mark for the company's total medical membership and total premiums suggests a hike of 2.7% and 14.3% from the respective year-ago reported figures.

Notably, the consensus mark for revenues of $18.4 billion hints at a 14.8% rise from the prior-year reported number.

The company is expected to have enjoyed healthy operating cash flow in the quarter to be reported, banking on excellent operating efficiency and solid working capital.

However, its specialty membership might have partially taken a hit from membership migration. The consensus mark for the same indicates a dip of 6.5% from the prior-year reported figure.

Humana’s first-quarter earnings performance might also reflect on escalating growth-related investments.

Additionally, total investment income for the to-be-reported quarter might have noticed a downtrend due to low investment yield. The consensus estimate for the same implies a 50.5% plunge from the year-ago reported figure.

What the Quantitative Model States

Our proven model predicts an earnings beat for Humana this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Humana has an Earnings ESP of +11.37%. This is because the Most Accurate Estimate is pegged at $5.38, higher than the Zacks Consensus Estimate of $4.83.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Humana Inc. Price and EPS Surprise

Humana Inc. Price and EPS Surprise

Humana Inc. price-eps-surprise | Humana Inc. Quote

Zacks Rank: Humana carries a Zacks Rank #3, which increases the predictive power of ESP. Plus, its positive ESP makes us hopeful about a positive surprise in the upcoming quarterly release.

Highlights of Q4 Earnings and Surprise History

Humana’s fourth-quarter 2019 operating earnings per share of $2.28 beat the Zacks Consensus Estimate by 3.6%. However, the bottom line declined 14% on a year-over-year basis. This downside was due to the unfavorable impact of higher compensation accruals for the Annual Incentive Plan (AIP) offered to employees at all levels and planned investments in the company's integrated care delivery model.

The company boasts a stellar earnings record, having delivered a positive surprise in all the trailing four quarters, the average being 8.3%.

Other Stocks to Consider

Here are a few other stocks worth considering from the medical sector with the perfect mix of elements to beat on earnings this reporting cycle:

Anthem Inc. is slated to announce first-quarter earnings on Apr 29. The stock has an Earnings ESP of +1.28% and a Zacks Rank #3.

Molina Healthcare, Inc. (MOH - Free Report) is set to report first-quarter earnings on Apr 30. The stock is #3 Ranked and has an Earnings ESP of +9.38%.

Aurora Cannabis Inc. (ACB - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank of 3. The company is scheduled to release first-quarter earnings on May 12.

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