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Why WellCare (WCG) Stock Should Be in Your Portfolio Now
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Leading managed care company WellCare Health Plans, Inc.’s business strategies should continue to support growth. The company has been strengthening its revenue base consistently over the last 10 years. The Affordable Care Act (ACA) implemented by former U.S. President Barrack Obama also contributed significantly to the company’s top-line growth.
However, things might change for Wellcare as the ACA is likely to be replaced by American Healthcare Act (AHCA) under the Trump administration. The new act might lead to a steep decline in Medicaid programs enrollment.
In spite of regulatory uncertainty raising concers for WellCare, it remains an attractive pick for investors. Let’s delve deeper to find out why.
Favorable Share Price Movement
Shares of WellCare have been performing well. Year to date, the stock has gained 26.2%, while the Zacks categorized Health Maintenance Organization (HMO) industry registered 15.2% increase. This clearly reflects the company’s business strength.
Revenue Growth
WellCare’s consistent revenue growth has been supported by strategic acquisitions, partnerships and alliances over the last three years. These initiatives have not only bolstered the company’s presence in existing markets but also expanded its operations geographically. Since 2011, revenues have increased at a four-year CAGR of 22.5%. In the first quarter of 2017, adjusted total premium revenue of $3.95 billion increased 13.5% year over year due to strong organic growth across all three lines of business and the company's acquisition of Care1st Arizona
Fundamental Growth
The company’s healthy balance sheet, mainly supported by its substantial cash inflow, has helped it increase shareholders’ value through several capital deployment initiatives. In the first quarter, net cash from operating activities was $394.5 million compared with $111.4 million in the prior-year quarter. The improvement was primarily driven by the advanced timing of Medicare-related receipts.
Inorganic Growth
WellCare has grown substantially in the last three years through acquisitions, partnerships and alliances. During 2016, the company acquired Care1st Arizona and Advicare, which contributed to its Medicaid business growth. In Apr 2017, WellCare completed the buyout of Universal American Corp. and teamed up with Catholic Health.
Strong Performance in Previous Quarters
The company delivered positive earnings surprises in the last four quarters with an average beat of 59.23%. In the last reported first quarter, the company’s adjusted operating earnings of $1.61 per share surpassed the Zacks Consensus Estimate by 35.3%. Earnings also surged 52% year over year, primarily due to continued operational execution as evidenced by strong results across all business lines.estimate revision if positive then mention
Align Technology, a medical dental supplies company, topped estimates in all of the last four quarters with an average beat of 59.23%.
Nobilis Health, an HMO behemoth, surpassed expectations in two of the last four quarters with an average positive surprise of 100.2%
Inogen is a medical instruments seller that delivered positive surprises in all of the last four quarters with an average beat of 82.42%.
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Why WellCare (WCG) Stock Should Be in Your Portfolio Now
Leading managed care company WellCare Health Plans, Inc.’s business strategies should continue to support growth. The company has been strengthening its revenue base consistently over the last 10 years. The Affordable Care Act (ACA) implemented by former U.S. President Barrack Obama also contributed significantly to the company’s top-line growth.
However, things might change for Wellcare as the ACA is likely to be replaced by American Healthcare Act (AHCA) under the Trump administration. The new act might lead to a steep decline in Medicaid programs enrollment.
In spite of regulatory uncertainty raising concers for WellCare, it remains an attractive pick for investors. Let’s delve deeper to find out why.
Favorable Share Price Movement
Shares of WellCare have been performing well. Year to date, the stock has gained 26.2%, while the Zacks categorized Health Maintenance Organization (HMO) industry registered 15.2% increase. This clearly reflects the company’s business strength.
Revenue Growth
WellCare’s consistent revenue growth has been supported by strategic acquisitions, partnerships and alliances over the last three years. These initiatives have not only bolstered the company’s presence in existing markets but also expanded its operations geographically. Since 2011, revenues have increased at a four-year CAGR of 22.5%. In the first quarter of 2017, adjusted total premium revenue of $3.95 billion increased 13.5% year over year due to strong organic growth across all three lines of business and the company's acquisition of Care1st Arizona
Fundamental Growth
The company’s healthy balance sheet, mainly supported by its substantial cash inflow, has helped it increase shareholders’ value through several capital deployment initiatives. In the first quarter, net cash from operating activities was $394.5 million compared with $111.4 million in the prior-year quarter. The improvement was primarily driven by the advanced timing of Medicare-related receipts.
Inorganic Growth
WellCare has grown substantially in the last three years through acquisitions, partnerships and alliances. During 2016, the company acquired Care1st Arizona and Advicare, which contributed to its Medicaid business growth. In Apr 2017, WellCare completed the buyout of Universal American Corp. and teamed up with Catholic Health.
Strong Performance in Previous Quarters
The company delivered positive earnings surprises in the last four quarters with an average beat of 59.23%. In the last reported first quarter, the company’s adjusted operating earnings of $1.61 per share surpassed the Zacks Consensus Estimate by 35.3%. Earnings also surged 52% year over year, primarily due to continued operational execution as evidenced by strong results across all business lines.estimate revision if positive then mention
Zacks Rank & Other Stocks to Consider
Wellcare presently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks from the same space include Align Technology, Inc. (ALGN - Free Report) , Nobilis Health Corp. (HLTH - Free Report) and Inogen Inc. (INGN - Free Report) . All of the stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Align Technology, a medical dental supplies company, topped estimates in all of the last four quarters with an average beat of 59.23%.
Nobilis Health, an HMO behemoth, surpassed expectations in two of the last four quarters with an average positive surprise of 100.2%
Inogen is a medical instruments seller that delivered positive surprises in all of the last four quarters with an average beat of 82.42%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>