Back to top

Can HCA Holdings (HCA) Surprise This Earnings Season?

Read MoreHide Full Article

We expect health benefits provider HCA Holdings, Inc. (HCA - Free Report) to beat expectations when it reports fourth-quarter 2013 results on Feb 4, 2014.

Why a Likely Positive Surprise?

Our proven model shows that HCA Holdings is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +4.76%. This is noteworthy and is indicative of a likely positive earnings surprise.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings. The Sell-rated stocks (carrying a Zacks Rank #4 or 5) going into an earnings announcement should never be considered, especially when the company is seeing negative estimate revisions.

The combination of a Zacks Rank #3 and an ESP of +4.76% makes us confident of a positive earnings beat by HCA Holdings on Feb 4.

What is Driving the Better-than-Expected Earnings?

HCA Holdings has been consistent in providing high quality yet affordable patient care to individuals across the nation. This has helped the company gain patient count over time.  The contract signed with Florida’s Blue Cross and Blue Shield last month is a testimony to its strategy. We expect this deal to increase patient outcomes, hence aiding solid operational results.

Moreover, HCA Holdings has also been intent in returning more value to its shareholders. In Nov 2013, the company repurchased shares worth $500 million, which will boost its bottom line.

The company’sinvestment in ventures would expand its capabilities as a hospital service provider. To expand its operations and enhance core efficiencies, HCA Holdings inked a deal with IASIS Healthcare LLC to purchase three Tampa Bay hospitals. This deal should enhance company operations in the Tampa Bay and St. Petersburg area. HCA Holdings also expects to benefit from the Affordable Care Act going forward.

HCA Holdings delivered positive surprises in two of the last four quarters with an average beat of 2.74%, with the highest surprise coming in at +9.64% in the fourth quarter of 2012.

Other Stocks to Consider

HCA Holdings is not the only firm expecting to outperform this earnings season. We also see likely earnings beats coming from these 3 peers in the medical industry:

MEDNAX, Inc. (MD - Free Report) , earnings ESP of +1.33% and a Zacks Rank #2.

Tenet Healthcare Corp. (THC - Free Report) , earnings ESP of +17.65% and a Zacks Rank #3.

Aetna Inc. (AET - Free Report) , earnings ESP of +2.90% and a Zacks Rank #3.

More from Zacks Analyst Blog

You May Like