A month has gone by since the last earnings report for HealthEquity (HQY Quick QuoteHQY - Free Report) . Shares have added about 4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is HealthEquity due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

HealthEquity Q3 Earnings and Revenues Beat Estimates

HealthEquity, Inc. reported adjusted earnings per share of 41 cents in third-quarter fiscal 2021, which beat the Zacks Consensus Estimate of 35 cents by 17.1%. However, the bottom line fell 4.7% on a year-over-year basis.

Revenues in Detail

Thecompany generated revenues of $179.4 million, outpacing the Zacks Consensus Estimate by 1.9%. Also the top line rose 14.2% from the prior-year quarter.

HSA Details

As of Oct  31, 2020, the total number of Health Savings Accounts (HSA) for which HealthEquity served as a non-bank custodian (HSA members), came in at5.5 million, up 9% year over year.

Additionally, total Active HSA assets were $12.4 billion, up 19% year over year.

Total Accounts including HSAs and complementary consumer directed benefits (CDB) accounts summed 12.5 million, flat year over year.

Segmental Performance

Service Revenues: Revenues of$104.6 million were up 19.4% from the year-ago figure.

Custodial Revenues: Revenues grew 3.4% year over year to $48.5  million.

Interchange Revenues: Revenues increased16.4% year over year to $26.2 million.

Margin Details

HealthEquity generated gross profit of $104.6 million, up 8.8% from the year-ago quarter. Gross margin was 58.3% of net revenues, down 282 basis points (bps) year over year.

Adjusted operating profit in the fiscal third quarter was $38.8 million, down 4.5% year over year. Adjusted operating margin was 21.6% in the period, contracting 423 bps year over year.

Financial Position

The company exited the fiscal third quarter with cash and cash equivalents of $299.4 million compared with $268.9 million at the end of the fiscal second quarter.

Cumulative cash flow from operating activities in the third quarter came in at $120.7 million, up from $74.1 million in the year-ago period.

Full-Fiscal View

For fiscal 2021, revenues are projected within $725-$731 million (up from the previously guided range of $720-$730 million). The Zacks Consensus Estimate for the sameis pegged at $728.2 million.

Adjusted earnings per share are expected within $1.55-$1.61 (up from the earlier issued range of $1.48-$1.58). The Zacks Consensus Estimate for the same stands at $1.56.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -14.54% due to these changes.

VGM Scores

At this time, HealthEquity has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, HealthEquity has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.