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Should You Buy HCA Healthcare (HCA) Ahead of Q1 Earnings?
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HCA Healthcare, Inc. (HCA - Free Report) is set to beat on earnings for the first quarter of 2024, the results for which are scheduled to be released on Apr 26, before the opening bell. Continued growth in Medicare and Medicaid businesses is expected to aid its results along with several other factors discussed below. This will likely have a positive impact on its price performance, which is already up handsomely in 2024.
Price Performance
Over the year-to-date period, HCA Healthcare shares have gained 14.7%, comfortably outperforming the industry’s 10.1% growth and the S&P 500 Index’s 4.5% rise.
Image Source: Zacks Investment Research
Given the company’s popularity, one can expect that any market-moving news so far has already been priced into the stock. Nevertheless, thanks to its earnings growth potential, strong cash-generating ability and expanding business lines, it still remains an attractive investment option. Additionally, if the company surpasses first-quarter earnings estimates, it could further bolster investor confidence.
Let’s delve deeper and understand the chances of that happening.
Rising Volumes
As seniors have resumed elective procedures that were previously postponed due to pandemic-related constraints, HCA’s patient volumes, occupancy rates and associated metrics are on the rise. Coupled with rising revenue per equivalent admission, the growing volumes will continue boosting the hospital company’s top line.
Considering the first quarter, the Zacks Consensus Estimate for admissions indicates 4.5% year-over-year growth, while the same for equivalent patient days hints at a 3.4% increase. The consensus mark for revenue per equivalent admission signals a 2.6% rise from the year-ago period. Additionally, the consensus estimate for Medicare and Medicaid revenues in the first quarter suggests nearly 3% and 14% year-over-year increases, respectively.
Thanks to these growing numbers, the consensus estimate for first-quarter revenues of $16.8 billion indicates an 8% year-over-year jump. Also, the Zacks Consensus Estimate for first-quarter earnings per share of $5.01 suggests a 1.6% increase from the prior-year figure of $4.93. Notably, HCA Healthcare beat the consensus estimate for earnings in three of the prior four quarters and missed on one occasion, with the average surprise being 9.8%.
Expanding Capacity
An aging U.S. population, along with rising cases of diseases, is bound to boost the demand for hospital services. HCA Healthcare continues to increase its capabilities through strategic acquisitions to address that growing demand, which will support its volume. Its strategic focus on strengthening its presence in key regions such as Florida and Texas will further enhance its portfolio, positioning it as a forward-thinking player for long-term growth.
Earnings Prediction
Our proven model predicts a likely earnings beat for the company this time around. HCA Healthcare has an Earnings ESP of +13.46% as the Most Accurate Estimate of $5.69 per share is currently pegged higher than the Zacks Consensus Estimate of $5.01. Also, it currently has a Zacks Rank #2 (Buy), further enhancing its appeal as an investment opportunity. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat, which is precisely the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Some Risk Factors to Consider
However, investors should keep in mind that rising patient volumes will also boost HCA’s expenses, especially in salaries and benefits, supply costs and other operating costs. With the inflation rate still above the long-term average, higher supply costs will likely trim its margins.
For the first quarter of 2024, our model suggests a nearly 9% year-over-year increase in its total operating expenses, which can partially offset the positives.
Bottom Line
HCA is, without a doubt, one of the best healthcare companies to buy in the market. And with earnings beat on the cards, the company might be up for another bull run.
Other Stocks That Warrant a Look
Here are some other companies from the broader Medical space that you may also want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for TransMedics’ bottom line for the to-be-reported quarter indicates 37.5% year-over-year growth. TMDX beat earnings estimates in each of the past four quarters, the average surprise being 107.8%.
Amedisys, Inc. (AMED - Free Report) has an Earnings ESP of +7.24% and a Zacks Rank #2.
The Zacks Consensus Estimate for Amedisys’ bottom line for the to-be-reported quarter indicates 1% year-over-year growth. AMED beat earnings estimates in two of the past four quarters and missed on the other occasions, with an average surprise of 6.4%.
Universal Health Services, Inc. (UHS - Free Report) has an Earnings ESP of +8.56% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Universal Health’s earnings per share for the to-be-reported quarter indicates a 34.2% year-over-year jump. UHS beat earnings estimates in each of the past four quarters, the average surprise being 5.9%.
Image: Bigstock
Should You Buy HCA Healthcare (HCA) Ahead of Q1 Earnings?
HCA Healthcare, Inc. (HCA - Free Report) is set to beat on earnings for the first quarter of 2024, the results for which are scheduled to be released on Apr 26, before the opening bell. Continued growth in Medicare and Medicaid businesses is expected to aid its results along with several other factors discussed below. This will likely have a positive impact on its price performance, which is already up handsomely in 2024.
Price Performance
Over the year-to-date period, HCA Healthcare shares have gained 14.7%, comfortably outperforming the industry’s 10.1% growth and the S&P 500 Index’s 4.5% rise.
Image Source: Zacks Investment Research
Given the company’s popularity, one can expect that any market-moving news so far has already been priced into the stock. Nevertheless, thanks to its earnings growth potential, strong cash-generating ability and expanding business lines, it still remains an attractive investment option. Additionally, if the company surpasses first-quarter earnings estimates, it could further bolster investor confidence.
Let’s delve deeper and understand the chances of that happening.
Rising Volumes
As seniors have resumed elective procedures that were previously postponed due to pandemic-related constraints, HCA’s patient volumes, occupancy rates and associated metrics are on the rise. Coupled with rising revenue per equivalent admission, the growing volumes will continue boosting the hospital company’s top line.
Considering the first quarter, the Zacks Consensus Estimate for admissions indicates 4.5% year-over-year growth, while the same for equivalent patient days hints at a 3.4% increase. The consensus mark for revenue per equivalent admission signals a 2.6% rise from the year-ago period. Additionally, the consensus estimate for Medicare and Medicaid revenues in the first quarter suggests nearly 3% and 14% year-over-year increases, respectively.
Thanks to these growing numbers, the consensus estimate for first-quarter revenues of $16.8 billion indicates an 8% year-over-year jump. Also, the Zacks Consensus Estimate for first-quarter earnings per share of $5.01 suggests a 1.6% increase from the prior-year figure of $4.93. Notably, HCA Healthcare beat the consensus estimate for earnings in three of the prior four quarters and missed on one occasion, with the average surprise being 9.8%.
Expanding Capacity
An aging U.S. population, along with rising cases of diseases, is bound to boost the demand for hospital services. HCA Healthcare continues to increase its capabilities through strategic acquisitions to address that growing demand, which will support its volume. Its strategic focus on strengthening its presence in key regions such as Florida and Texas will further enhance its portfolio, positioning it as a forward-thinking player for long-term growth.
Earnings Prediction
Our proven model predicts a likely earnings beat for the company this time around. HCA Healthcare has an Earnings ESP of +13.46% as the Most Accurate Estimate of $5.69 per share is currently pegged higher than the Zacks Consensus Estimate of $5.01. Also, it currently has a Zacks Rank #2 (Buy), further enhancing its appeal as an investment opportunity. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat, which is precisely the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Some Risk Factors to Consider
However, investors should keep in mind that rising patient volumes will also boost HCA’s expenses, especially in salaries and benefits, supply costs and other operating costs. With the inflation rate still above the long-term average, higher supply costs will likely trim its margins.
For the first quarter of 2024, our model suggests a nearly 9% year-over-year increase in its total operating expenses, which can partially offset the positives.
Bottom Line
HCA is, without a doubt, one of the best healthcare companies to buy in the market. And with earnings beat on the cards, the company might be up for another bull run.
Other Stocks That Warrant a Look
Here are some other companies from the broader Medical space that you may also want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time around:
TransMedics Group, Inc. (TMDX - Free Report) has an Earnings ESP of +240.00% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TransMedics’ bottom line for the to-be-reported quarter indicates 37.5% year-over-year growth. TMDX beat earnings estimates in each of the past four quarters, the average surprise being 107.8%.
Amedisys, Inc. (AMED - Free Report) has an Earnings ESP of +7.24% and a Zacks Rank #2.
The Zacks Consensus Estimate for Amedisys’ bottom line for the to-be-reported quarter indicates 1% year-over-year growth. AMED beat earnings estimates in two of the past four quarters and missed on the other occasions, with an average surprise of 6.4%.
Universal Health Services, Inc. (UHS - Free Report) has an Earnings ESP of +8.56% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Universal Health’s earnings per share for the to-be-reported quarter indicates a 34.2% year-over-year jump. UHS beat earnings estimates in each of the past four quarters, the average surprise being 5.9%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.