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Humana and Zoom Video have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – October 27, 2022 – Zacks Equity Research shares Humana Inc. (HUM - Free Report) as the Bull of the Day and Zoom Video (ZM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil Corp. (XOM - Free Report) , Comstock Resources, Inc. (CRK - Free Report) and Chevron Corp. (CVX - Free Report) .
Humana Inc. is bucking the market downturn in 2022, with the health insurance powerhouse continually hitting fresh highs.
Humana stock posted another new all-time high on Wednesday as Wall Street searches high and low for companies thriving during 40-year high inflation and the ongoing economic uncertainty.
Humana's near-term bull case and its long-term potential both hinge on some rather large-scale societal trends that are hard to bet against. Healthcare needs never stop and the U.S. spends a ton of money on healthcare for a population that's growing older and increasingly unhealthy, which fits directly into Humana's core business.
Humana Basics
Humana is a health insurance firm that offers a wide range of plans for Medicare, Medicaid, dental, vision, and pharmacy. The company's bread-and-butter segment is Medicare Advantage. Humana's total Medicare Advantage enrollment hit roughly 5.1 million last quarter, up 4.5% YoY, with its smaller Medicare stand-alone PDP down 2% at 3.6 million.
Humana reportedly holds about 18% of the entire Medicare Advantage enrollment across the country, coming in second behind UnitedHealthcare's 28%. Medicare Advantage, which is a more private sector-based alternative vs. Medicare, is projected to account for roughly half of all Medicare enrollment within the next few years.
Despite its success and market share, Humana is focused on expanding its reach and is set to spend $1 billion to fund growth and investment in its Medicare Advantage business in 2023.
Near-Term Growth Prospects
Humana averaged 12% sales growth in the past four years, as part of a steady 20-year run. Zacks estimates call for HUM's revenue to climb 12% in 2022 to reach $92.90 billion, up from $83.06 billion last year. The company is then projected to post another 9% sales growth in FY23.
The Medicare giant's adjusted earnings are expected to climb by 21% this year and another 12% next year. Better still, HUM executives once again raised the firm's 2022 guidance in the middle of September and flexed its stability by targeting a 14% CAGR for earnings through 2025. Plus, it projected "continued earnings growth in 2026 and beyond at or above the EPS growth trends reflected in our new mid-term target."
Humana's positive earnings revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now. HUM has also managed to top our EPS estimates for five years running, including a 13% beat in Q2 and an 18% beat in the first quarter of 2022.
Long-Term Healthcare Trends
Humana executives projected that over 42% of the eligible Medicare-age population enrolled in a Medicare Advantage plan in 2021, or roughly 27 million out of around 63 million people. Other industry-tracking groups project this figure will reach 50% within a few years as people look for more holistic offerings.
More broadly, millions more people will age into the group of those 65 or older who qualify for Medicare offerings. The total U.S. population of those 65 or older is projected to reach nearly 72 million by 2030 and almost 90 million by 2050.
The aging population brings with it more medical issues, and 6 in 10 American adults already have a chronic disease. On top of that, total U.S. healthcare spending is projected to grow at an average annual rate of 5.4% to reach $6.2 trillion by 2028, up from $4.1 trillion in 2020.
Other Fundamentals
HUM shares have surged 620% in the last 10 years vs. its industry's 85% and the S&P 500's 190%. This includes a 16% climb in 2022 that helped it high fresh highs on Wednesday. Humana has, of course, destroyed the market and outclimbed the broader Zacks Medical Sector's 21% drop and its industry's 8% gain.
Humana trades near its five-year median at 19.3X forward 12-month earnings and at a discount vs. its Econ Sector's 21.3X and its Medical – HMOs industry's 20.5X.
Humana boasts an impressive balance sheet, with around $18 billion in cash and equivalents to help reach a total of $27 billion in current assets and $47 billion in total assets vs. $31 billion in total liabilities.
In terms of income generation, Humana's 0.60% dividend yield is nothing special. That said, the company has plenty of room to grow its dividend, with a 14% payout ratio at the moment. And it has already raised its dividend six times in the last five years, for an annualized growth rate of 24%.
Bottom Line
At the moment, 12 of the 17 brokerage recommendations Zacks has are "Strong Buys," alongside two "Buys," and nothing below a "Hold." Plus, its Medical – HMOs segment sits in the top 15% of over 250 Zacks industries.
It was always going to be impossible for Zoom Video to match its initial pandemic-fueled success even though the hybrid and remote work world is here to stay in some capacity. Zoom became a victim of its own meteoric rise and now its earnings outlook is trending in the wrong direction.
Zoomed Too Far, Too Fast
Zoom has expanded its portfolio from a video conferencing app to a more complete communications platform that includes the likes of Zoom Rooms, Phones, Events, and more. Its offerings are popular as businesses look to modernize their telecom solutions. The goal is to have a unified place for calls, video, meetings, chat, and more.
Zoom was growing before the pandemic. In fact, its revenue surged 88% during its first year public after its April 2019 debut. Zoom's software then took off. Its sales skyrocketed 326% from around $600 million to $2.65 billion in its fiscal 2021, driven by thousands of new paying clients.
The remote work world gained steam the following year as well. Zoom posted another 55% revenue growth in its FY22 (period ended January 31, 2022). Zoom ended the year with roughly 191K enterprise customers, up 35% YoY. Zoom has added to that total so far during its FY23, closing last quarter with approximately 204K enterprise customers, up 18% from the year-ago period.
Despite its ability to keep growing and adding enterprise clients, the videoconferencing firm simply cannot escape its own looming growth shadow for the moment. Zacks estimates call for Zoom's revenue to climb 7% this year to $4.39 billion and then another 10% next year to $4.81 billion.
Meanwhile, its adjusted earnings are projected to slip 27% this year to $3.71 per share and then come in essentially flat the next year. Zoom's EPS outlook has also trended in the wrong direction to help it land a Zacks Rank #5 (Strong Sell) right now.
Bottom Line
Zoom shares are down around 85% from their fall 2020 peaks. ZM has also managed to tumble 55% in 2022. The stock has bounced back a bit recently to close regular trading Thursday at $83.37 per share, and the current Zacks average price target offers 50% upside. But now might not be the time for investors to take a chance on Zoom with it still trading at nearly 60X forward 12-month earnings in a rising interest rate environment.
Additional content:
Is a Beat in the Cards for ExxonMobil's (XOM - Free Report) Q3 Earnings?
Exxon Mobil Corp. is set to report third-quarter 2022 results on Oct 28, before the opening bell.
In the last reported quarter, the integrated energy giant's earnings per share of $4.14, excluding identified items, beat the Zacks Consensus Estimate of $3.80. Strong earnings were driven by higher realized commodity prices and solid refinery utilization, partially offset by increased ethane feed costs in North America.
In the trailing four quarters, ExxonMobil beat the Zacks Consensus Estimate for earnings thrice and missed the same once, delivering a surprise of 1.6%, on average.
Let's delve into the factors that are anticipated to have influenced the energy giant's performance in the September-end quarter.
Estimate Trend
The Zacks Consensus Estimate for ExxonMobil's third-quarter earnings per share of $3.88 has witnessed eight upward revisions and no downward movement in the past 30 days. The consensus estimate suggests a year-over-year increase of 145.6%.
The Zacks Consensus Estimate for the to-be-reported quarter's revenues of $115.2 billion indicates a 56.1% improvement from the year-ago reported figure.
Earnings Whispers
Our proven model conclusively predicts an earnings beat for ExxonMobil this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: ExxonMobil has an Earnings ESP of +1.39%. This is because the Most Accurate Estimate is currently pegged at earnings of $3.94 per share, whereas the Zacks Consensus Estimate is pinned at $3.88 per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Rank: ExxonMobil currently carries a Zacks Rank #2.
Factors to Note
Oil prices were much higher in the September-end quarter of this year. Higher oil prices were favorable for ExxonMobil's exploration and production activities as it has a strong presence in the prolific Permian Basin.
The Zacks Consensus Estimate for ExxonMobil's daily production volumes is pegged at 3,774 million barrels of oil equivalent per day (MBoe/d), suggesting an improvement from 3,665 Mboe/d reported in the year-ago quarter. Our estimate for the company's daily production volumes is pegged at 3,863.4 Mboe/d, also indicating an increase from the prior-year quarter's reported figure. Higher production and price are likely to have aided XOM's upstream operations.
ExxonMobil is expected to have reaped the rewards of a better macro environment in its downstream unit. The Zacks Consensus Estimate for ExxonMobil's total refinery throughput volumes is pegged at 4,336 million barrels per day (Mbbls/d), suggesting an improvement from 4,051 Mbbls/d reported in the year-ago quarter. Our estimate for XOM's total refinery throughput volumes is pegged at 4,336.3 Mboe/d, also indicating an increase from the prior-year quarter's reported figure.
Other Stocks That Warrant a Look
Here are some other companies from the Energy space that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports. You can see the complete list of today's Zacks #1 Rank stocks here
Devon is scheduled to release third-quarter results on Nov 1. The Zacks Consensus Estimate for DVN's quarterly earnings is pegged at $2.13 per share, suggesting a massive increase from the prior-year reported figure.
Comstock Resources, Inc. has an Earnings ESP of +1.04% and currently flaunts a Zacks Rank of 1.
Comstock is scheduled to report third-quarter results on Nov 1. The Zacks Consensus Estimate for CRK's earnings is pegged at $1.16 per share, suggesting a significant increase from the prior-year reported figure.
Chevron Corp. currently has an Earnings ESP of +0.06% and a Zacks Rank #3.
Chevron is scheduled to release third-quarter earnings on Oct 28. The Zacks Consensus Estimate for CVX's earnings is pegged at $5.02 per share, suggesting a massive improvement from the prior-year reported figure.
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Humana and Zoom Video have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 27, 2022 – Zacks Equity Research shares Humana Inc. (HUM - Free Report) as the Bull of the Day and Zoom Video (ZM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil Corp. (XOM - Free Report) , Comstock Resources, Inc. (CRK - Free Report) and Chevron Corp. (CVX - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Humana Inc. is bucking the market downturn in 2022, with the health insurance powerhouse continually hitting fresh highs.
Humana stock posted another new all-time high on Wednesday as Wall Street searches high and low for companies thriving during 40-year high inflation and the ongoing economic uncertainty.
Humana's near-term bull case and its long-term potential both hinge on some rather large-scale societal trends that are hard to bet against. Healthcare needs never stop and the U.S. spends a ton of money on healthcare for a population that's growing older and increasingly unhealthy, which fits directly into Humana's core business.
Humana Basics
Humana is a health insurance firm that offers a wide range of plans for Medicare, Medicaid, dental, vision, and pharmacy. The company's bread-and-butter segment is Medicare Advantage. Humana's total Medicare Advantage enrollment hit roughly 5.1 million last quarter, up 4.5% YoY, with its smaller Medicare stand-alone PDP down 2% at 3.6 million.
Humana reportedly holds about 18% of the entire Medicare Advantage enrollment across the country, coming in second behind UnitedHealthcare's 28%. Medicare Advantage, which is a more private sector-based alternative vs. Medicare, is projected to account for roughly half of all Medicare enrollment within the next few years.
Despite its success and market share, Humana is focused on expanding its reach and is set to spend $1 billion to fund growth and investment in its Medicare Advantage business in 2023.
Near-Term Growth Prospects
Humana averaged 12% sales growth in the past four years, as part of a steady 20-year run. Zacks estimates call for HUM's revenue to climb 12% in 2022 to reach $92.90 billion, up from $83.06 billion last year. The company is then projected to post another 9% sales growth in FY23.
The Medicare giant's adjusted earnings are expected to climb by 21% this year and another 12% next year. Better still, HUM executives once again raised the firm's 2022 guidance in the middle of September and flexed its stability by targeting a 14% CAGR for earnings through 2025. Plus, it projected "continued earnings growth in 2026 and beyond at or above the EPS growth trends reflected in our new mid-term target."
Humana's positive earnings revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now. HUM has also managed to top our EPS estimates for five years running, including a 13% beat in Q2 and an 18% beat in the first quarter of 2022.
Long-Term Healthcare Trends
Humana executives projected that over 42% of the eligible Medicare-age population enrolled in a Medicare Advantage plan in 2021, or roughly 27 million out of around 63 million people. Other industry-tracking groups project this figure will reach 50% within a few years as people look for more holistic offerings.
More broadly, millions more people will age into the group of those 65 or older who qualify for Medicare offerings. The total U.S. population of those 65 or older is projected to reach nearly 72 million by 2030 and almost 90 million by 2050.
The aging population brings with it more medical issues, and 6 in 10 American adults already have a chronic disease. On top of that, total U.S. healthcare spending is projected to grow at an average annual rate of 5.4% to reach $6.2 trillion by 2028, up from $4.1 trillion in 2020.
Other Fundamentals
HUM shares have surged 620% in the last 10 years vs. its industry's 85% and the S&P 500's 190%. This includes a 16% climb in 2022 that helped it high fresh highs on Wednesday. Humana has, of course, destroyed the market and outclimbed the broader Zacks Medical Sector's 21% drop and its industry's 8% gain.
Humana trades near its five-year median at 19.3X forward 12-month earnings and at a discount vs. its Econ Sector's 21.3X and its Medical – HMOs industry's 20.5X.
Humana boasts an impressive balance sheet, with around $18 billion in cash and equivalents to help reach a total of $27 billion in current assets and $47 billion in total assets vs. $31 billion in total liabilities.
In terms of income generation, Humana's 0.60% dividend yield is nothing special. That said, the company has plenty of room to grow its dividend, with a 14% payout ratio at the moment. And it has already raised its dividend six times in the last five years, for an annualized growth rate of 24%.
Bottom Line
At the moment, 12 of the 17 brokerage recommendations Zacks has are "Strong Buys," alongside two "Buys," and nothing below a "Hold." Plus, its Medical – HMOs segment sits in the top 15% of over 250 Zacks industries.
Bear of the Day:
It was always going to be impossible for Zoom Video to match its initial pandemic-fueled success even though the hybrid and remote work world is here to stay in some capacity. Zoom became a victim of its own meteoric rise and now its earnings outlook is trending in the wrong direction.
Zoomed Too Far, Too Fast
Zoom has expanded its portfolio from a video conferencing app to a more complete communications platform that includes the likes of Zoom Rooms, Phones, Events, and more. Its offerings are popular as businesses look to modernize their telecom solutions. The goal is to have a unified place for calls, video, meetings, chat, and more.
Zoom was growing before the pandemic. In fact, its revenue surged 88% during its first year public after its April 2019 debut. Zoom's software then took off. Its sales skyrocketed 326% from around $600 million to $2.65 billion in its fiscal 2021, driven by thousands of new paying clients.
The remote work world gained steam the following year as well. Zoom posted another 55% revenue growth in its FY22 (period ended January 31, 2022). Zoom ended the year with roughly 191K enterprise customers, up 35% YoY. Zoom has added to that total so far during its FY23, closing last quarter with approximately 204K enterprise customers, up 18% from the year-ago period.
Despite its ability to keep growing and adding enterprise clients, the videoconferencing firm simply cannot escape its own looming growth shadow for the moment. Zacks estimates call for Zoom's revenue to climb 7% this year to $4.39 billion and then another 10% next year to $4.81 billion.
Meanwhile, its adjusted earnings are projected to slip 27% this year to $3.71 per share and then come in essentially flat the next year. Zoom's EPS outlook has also trended in the wrong direction to help it land a Zacks Rank #5 (Strong Sell) right now.
Bottom Line
Zoom shares are down around 85% from their fall 2020 peaks. ZM has also managed to tumble 55% in 2022. The stock has bounced back a bit recently to close regular trading Thursday at $83.37 per share, and the current Zacks average price target offers 50% upside. But now might not be the time for investors to take a chance on Zoom with it still trading at nearly 60X forward 12-month earnings in a rising interest rate environment.
Additional content:
Is a Beat in the Cards for ExxonMobil's (XOM - Free Report) Q3 Earnings?
Exxon Mobil Corp. is set to report third-quarter 2022 results on Oct 28, before the opening bell.
In the last reported quarter, the integrated energy giant's earnings per share of $4.14, excluding identified items, beat the Zacks Consensus Estimate of $3.80. Strong earnings were driven by higher realized commodity prices and solid refinery utilization, partially offset by increased ethane feed costs in North America.
In the trailing four quarters, ExxonMobil beat the Zacks Consensus Estimate for earnings thrice and missed the same once, delivering a surprise of 1.6%, on average.
Let's delve into the factors that are anticipated to have influenced the energy giant's performance in the September-end quarter.
Estimate Trend
The Zacks Consensus Estimate for ExxonMobil's third-quarter earnings per share of $3.88 has witnessed eight upward revisions and no downward movement in the past 30 days. The consensus estimate suggests a year-over-year increase of 145.6%.
The Zacks Consensus Estimate for the to-be-reported quarter's revenues of $115.2 billion indicates a 56.1% improvement from the year-ago reported figure.
Earnings Whispers
Our proven model conclusively predicts an earnings beat for ExxonMobil this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: ExxonMobil has an Earnings ESP of +1.39%. This is because the Most Accurate Estimate is currently pegged at earnings of $3.94 per share, whereas the Zacks Consensus Estimate is pinned at $3.88 per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Rank: ExxonMobil currently carries a Zacks Rank #2.
Factors to Note
Oil prices were much higher in the September-end quarter of this year. Higher oil prices were favorable for ExxonMobil's exploration and production activities as it has a strong presence in the prolific Permian Basin.
The Zacks Consensus Estimate for ExxonMobil's daily production volumes is pegged at 3,774 million barrels of oil equivalent per day (MBoe/d), suggesting an improvement from 3,665 Mboe/d reported in the year-ago quarter. Our estimate for the company's daily production volumes is pegged at 3,863.4 Mboe/d, also indicating an increase from the prior-year quarter's reported figure. Higher production and price are likely to have aided XOM's upstream operations.
ExxonMobil is expected to have reaped the rewards of a better macro environment in its downstream unit. The Zacks Consensus Estimate for ExxonMobil's total refinery throughput volumes is pegged at 4,336 million barrels per day (Mbbls/d), suggesting an improvement from 4,051 Mbbls/d reported in the year-ago quarter. Our estimate for XOM's total refinery throughput volumes is pegged at 4,336.3 Mboe/d, also indicating an increase from the prior-year quarter's reported figure.
Other Stocks That Warrant a Look
Here are some other companies from the Energy space that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports. You can see the complete list of today's Zacks #1 Rank stocks here
Devon is scheduled to release third-quarter results on Nov 1. The Zacks Consensus Estimate for DVN's quarterly earnings is pegged at $2.13 per share, suggesting a massive increase from the prior-year reported figure.
Comstock Resources, Inc. has an Earnings ESP of +1.04% and currently flaunts a Zacks Rank of 1.
Comstock is scheduled to report third-quarter results on Nov 1. The Zacks Consensus Estimate for CRK's earnings is pegged at $1.16 per share, suggesting a significant increase from the prior-year reported figure.
Chevron Corp. currently has an Earnings ESP of +0.06% and a Zacks Rank #3.
Chevron is scheduled to release third-quarter earnings on Oct 28. The Zacks Consensus Estimate for CVX's earnings is pegged at $5.02 per share, suggesting a massive improvement from the prior-year reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.