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Reasons to Retain HCA Healthcare (HCA) Stock in Your Portfolio
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HCA Healthcare, Inc. (HCA - Free Report) is well-poised to grow on the back of expanding patient volumes and growing admissions. Its inorganic growth strategy and same-store facility figures are also encouraging.
Over the past year, shares of HCA Healthcare have gained 14.7%, outperforming the industry’s 13.5% growth. Headquartered in Nashville, TN, HCA operates general and acute care hospitals. It has a market cap of $72.6 billion.
Solid Rank & VGM Score
HCA currently carries a Zacks Rank #3 (Hold) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for HCA Healthcare’s current-year earnings per share is pegged at $18.16, indicating 7.5% year-over-year growth. HCA expects annual growth in earnings between 8% and 12% in the next five years. HCA Healthcare beat on earnings in two of the last four quarters and missed twice, with an average surprise of 4.8%.
The consensus mark for current-year revenues is pegged at $64.2 billion, signaling a 6.6% year-over-year increase. The company’s operating strength is enabling it to rise above multiple headwinds like stuffing challenges.
We expect its Managed Medicare and Medicaid operations to witness nearly 12.1% and 26.2% year-over-year increases, respectively, in 2023, which will support top-line growth. Managed Care & Insurers operations have also witnessed growth in the first nine months of this year, following last year’s 3.9% decline. We expect it to increase nearly 6.1% in 2023.
Our estimate for 2023 equivalent admissions suggests a 5% year-over-year increase. Inpatient revenues per admission witnessed 5% growth in the third quarter. The full-year growth rate is expected to be 3.6% in 2023. The company expects a 2-3% annual increase per year in equivalent admissions, coupled with an equivalent rise in revenue per equivalent admission.
Moreover, our estimate for inpatient and outpatient surgery cases for 2023 signals around 1.5% and 2% year-over-year increases, respectively. As seniors have resumed delayed elective procedures, demand for services provided by companies like HCA is expected to rise, which will drive patient volumes.
The company’s strategic acquisition initiatives bode well for the future. In 2020, 2021 and 2022, HCA expended approximately $568 million, $1.1 billion and $224 million, respectively, on acquiring hospitals and healthcare entities. Earlier this year, the company agreed to acquire 41 urgent care centers from FastMed in Texas. In December 2023, HCA’s affiliate acquired 11 freestanding emergency departments, supporting HCA's overarching strategy to bolster its emergency services and solidifying its position as a dominant care provider.
Risks
Despite the upside potential, investors should keep an eye out for its expenses, which have been rising for the past few years and constraining its bottom line from reaching its full potential. Staffing challenges, although rapidly decreasing, still can keep expenses high. We expect total costs to rise nearly 7% in 2023.
The Zacks Consensus Estimate for Enovis’ current-year earnings implies a 4.9% increase from the year-ago reported figure. The consensus mark for its current-year revenues is pegged at $1.7 billion. ENOV beat earnings estimates in all the last four quarters, with an average surprise of 11%.
The Zacks Consensus Estimate for Centene’s 2023 earnings indicates a 15.1% year-over-year increase to $6.65 per share. It has witnessed one upward estimate revision over the past seven days against no movement in the opposite direction. The consensus mark for CNC’s 2023 revenues indicates 4.4% growth from a year ago.
The Zacks Consensus Estimate for Motus GI’s 2023 bottom line suggests a 67.2% year-over-year improvement. It beat earnings estimates in all the last four quarters, with an average surprise of 40.2%. MOTS has witnessed one upward estimate revision over the past 60 days against no movement in the opposite direction.
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Reasons to Retain HCA Healthcare (HCA) Stock in Your Portfolio
HCA Healthcare, Inc. (HCA - Free Report) is well-poised to grow on the back of expanding patient volumes and growing admissions. Its inorganic growth strategy and same-store facility figures are also encouraging.
Over the past year, shares of HCA Healthcare have gained 14.7%, outperforming the industry’s 13.5% growth. Headquartered in Nashville, TN, HCA operates general and acute care hospitals. It has a market cap of $72.6 billion.
Solid Rank & VGM Score
HCA currently carries a Zacks Rank #3 (Hold) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for HCA Healthcare’s current-year earnings per share is pegged at $18.16, indicating 7.5% year-over-year growth. HCA expects annual growth in earnings between 8% and 12% in the next five years. HCA Healthcare beat on earnings in two of the last four quarters and missed twice, with an average surprise of 4.8%.
HCA Healthcare, Inc. Price and EPS Surprise
HCA Healthcare, Inc. price-eps-surprise | HCA Healthcare, Inc. Quote
The consensus mark for current-year revenues is pegged at $64.2 billion, signaling a 6.6% year-over-year increase. The company’s operating strength is enabling it to rise above multiple headwinds like stuffing challenges.
We expect its Managed Medicare and Medicaid operations to witness nearly 12.1% and 26.2% year-over-year increases, respectively, in 2023, which will support top-line growth. Managed Care & Insurers operations have also witnessed growth in the first nine months of this year, following last year’s 3.9% decline. We expect it to increase nearly 6.1% in 2023.
Our estimate for 2023 equivalent admissions suggests a 5% year-over-year increase. Inpatient revenues per admission witnessed 5% growth in the third quarter. The full-year growth rate is expected to be 3.6% in 2023. The company expects a 2-3% annual increase per year in equivalent admissions, coupled with an equivalent rise in revenue per equivalent admission.
Moreover, our estimate for inpatient and outpatient surgery cases for 2023 signals around 1.5% and 2% year-over-year increases, respectively. As seniors have resumed delayed elective procedures, demand for services provided by companies like HCA is expected to rise, which will drive patient volumes.
The company’s strategic acquisition initiatives bode well for the future. In 2020, 2021 and 2022, HCA expended approximately $568 million, $1.1 billion and $224 million, respectively, on acquiring hospitals and healthcare entities. Earlier this year, the company agreed to acquire 41 urgent care centers from FastMed in Texas. In December 2023, HCA’s affiliate acquired 11 freestanding emergency departments, supporting HCA's overarching strategy to bolster its emergency services and solidifying its position as a dominant care provider.
Risks
Despite the upside potential, investors should keep an eye out for its expenses, which have been rising for the past few years and constraining its bottom line from reaching its full potential. Staffing challenges, although rapidly decreasing, still can keep expenses high. We expect total costs to rise nearly 7% in 2023.
Key Picks
Some better-ranked stocks in the broader Medical space are Enovis Corporation (ENOV - Free Report) , Centene Corporation (CNC - Free Report) and Motus GI Holdings, Inc. (MOTS - Free Report) . Each stock presently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Enovis’ current-year earnings implies a 4.9% increase from the year-ago reported figure. The consensus mark for its current-year revenues is pegged at $1.7 billion. ENOV beat earnings estimates in all the last four quarters, with an average surprise of 11%.
The Zacks Consensus Estimate for Centene’s 2023 earnings indicates a 15.1% year-over-year increase to $6.65 per share. It has witnessed one upward estimate revision over the past seven days against no movement in the opposite direction. The consensus mark for CNC’s 2023 revenues indicates 4.4% growth from a year ago.
The Zacks Consensus Estimate for Motus GI’s 2023 bottom line suggests a 67.2% year-over-year improvement. It beat earnings estimates in all the last four quarters, with an average surprise of 40.2%. MOTS has witnessed one upward estimate revision over the past 60 days against no movement in the opposite direction.