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WellCare Health's (WCG) Top Line Grows on Inorganic Efforts
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WellCare Health Plans, Inc. is poised for long-term growth on the back of organic and inorganic strategies. The company has seen a consistent growth in revenues, at a CAGR of 18% in the last five years (2011-16), primarily on premiums. For 2017, total adjusted premium revenues are expected in the band of $16.675-$16.925 billion, up 18% from the 2016 level.
The Affordable Care Act (ACA) or Obamacare contributed significantly to the company’s top line. However, the Trump administration is making every effort to repeal and replace ACA. Despite the unpredictable nature of regulation and its impact on the industry, WellCare Health continues to be an attractive pick for investors.
Since 2011, strategic acquisitions, partnerships and alliances have driven the company’s revenues. These initiatives have helped the company bolster foothold in the existing markets and expand geographical presence.
Apart from revenue growth, consistent generation of cash inflow is a major positive for the company. A solid cash position has helped WellCare Health enhance shareholders’ value through several capital-deployment initiatives. The company has been engaged in frequent share repurchase programs as well as regular dividend payments to maximize investors’ return. Year to date, its shares have returned 47.9% compared with the industry’s rally of 34.7%.
The company maintains a consistent record of earnings outperformance. In each of the last four quarters, WellCare Health’s bottom line surpassed expectations with an average beat of 64.3%. Following strong third-quarter 2017 results, the company raised its earnings and revenue guidance for 2017. This upbeat guidance boosts shareholders' confidence in the stock. The Zacks Consensus Estimate for the company’s 2017 and 2018 earnings have been revised upward by 17% and 7%, respectively, in the past 30 days.
However, WellCare Health faces rising level of debt that increases the borrowing cost, which eventually dents the bottom line.
Also, the company has been witnessing a steep increase in the total expenses that are weighing on margins.
Investors interested in the Medical – Health Maintenance Organization industry can also consider stocks like Triple-S Management Corporation , Centene Corporation (CNC - Free Report) and The Joint Corp. (JYNT - Free Report) . While Triple-S Management sports a Zacks Rank #1, the other two stocks carry a Zacks Rank #2 (Buy).
Triple-S Management delivered positive surprises in two of the last four quarters, with an average beat of 74%. The stock has gained 34.8%, slightly outpacing the industry.
Centene delivered positive surprises in all of the last four quarters with an average beat of 10.6%. Its shares have returned 66.2% year to date, beating the industry mark.
Joint Corp delivered positive surprises in three of the last four quarters, with an average beat of 5.5%. The shares have rallied 102.6% year to date, outperforming the industry.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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WellCare Health's (WCG) Top Line Grows on Inorganic Efforts
WellCare Health Plans, Inc. is poised for long-term growth on the back of organic and inorganic strategies. The company has seen a consistent growth in revenues, at a CAGR of 18% in the last five years (2011-16), primarily on premiums. For 2017, total adjusted premium revenues are expected in the band of $16.675-$16.925 billion, up 18% from the 2016 level.
The Affordable Care Act (ACA) or Obamacare contributed significantly to the company’s top line. However, the Trump administration is making every effort to repeal and replace ACA. Despite the unpredictable nature of regulation and its impact on the industry, WellCare Health continues to be an attractive pick for investors.
Since 2011, strategic acquisitions, partnerships and alliances have driven the company’s revenues. These initiatives have helped the company bolster foothold in the existing markets and expand geographical presence.
Apart from revenue growth, consistent generation of cash inflow is a major positive for the company. A solid cash position has helped WellCare Health enhance shareholders’ value through several capital-deployment initiatives. The company has been engaged in frequent share repurchase programs as well as regular dividend payments to maximize investors’ return. Year to date, its shares have returned 47.9% compared with the industry’s rally of 34.7%.
The company maintains a consistent record of earnings outperformance. In each of the last four quarters, WellCare Health’s bottom line surpassed expectations with an average beat of 64.3%. Following strong third-quarter 2017 results, the company raised its earnings and revenue guidance for 2017. This upbeat guidance boosts shareholders' confidence in the stock. The Zacks Consensus Estimate for the company’s 2017 and 2018 earnings have been revised upward by 17% and 7%, respectively, in the past 30 days.
However, WellCare Health faces rising level of debt that increases the borrowing cost, which eventually dents the bottom line.
Also, the company has been witnessing a steep increase in the total expenses that are weighing on margins.
Zacks Rank & Other Stocks to Consider
WellCare Health sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Investors interested in the Medical – Health Maintenance Organization industry can also consider stocks like Triple-S Management Corporation , Centene Corporation (CNC - Free Report) and The Joint Corp. (JYNT - Free Report) . While Triple-S Management sports a Zacks Rank #1, the other two stocks carry a Zacks Rank #2 (Buy).
Triple-S Management delivered positive surprises in two of the last four quarters, with an average beat of 74%. The stock has gained 34.8%, slightly outpacing the industry.
Centene delivered positive surprises in all of the last four quarters with an average beat of 10.6%. Its shares have returned 66.2% year to date, beating the industry mark.
Joint Corp delivered positive surprises in three of the last four quarters, with an average beat of 5.5%. The shares have rallied 102.6% year to date, outperforming the industry.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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