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Why Is HCA Healthcare (HCA) Up 7.4% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for HCA Healthcare, Inc. (HCA - Free Report) . Shares have added about 7.4% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is HCA 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.

HCA Healthcare Beats on Q1 Earnings, Keeps Guidance

HCA Healthcare, Inc. reported first-quarter 2018 adjusted earnings of $2.33 per share, surpassing the Zacks Consensus Estimate of $2.07 by 12.6%. Moreover, the bottom line shot up nearly 34% year over year.

The company’s net income per share of $3.18 in the first quarter includes 85 cents from the sale of Oklahoma facilities and a tax benefit of 26 cents. This reflects a substantial 83% year-over-year increase.

Quarterly Details

HCA Healthcare generated revenues of $11.4 billion, beating the Zacks Consensus Estimate of $11.3 billion. The reported figure was up 7.5% from the year-ago quarter.

Same facility equivalent admissions inched up 1.8% year over year while same facility admissions increased 2.2%. Same facility revenues per equivalent admission rose 3.9%.

Expenses increased nearly 8% year over year to $9.3 billion.

Adjusted EBITDA totaled $2.1 billion, up 5.6% year over year.
As of Mar 31, 2018, HCA Healthcare operated 178 hospitals and 120 freestanding surgery centers.

Financial Update

As of Mar 31, 2018, the company had cash and cash equivalents of about $1.1 billion, total debt of $33.3 billion and total assets of $37.3 billion.
During the reported quarter, capital expenditures totaled $694 million excluding acquisitions. Cash flows from operating activities were $1.3 billion, up 1.6% year over year.

Dividend and Share Repurchase Update

HCA Healthcare has announced a quarterly cash dividend of 35 cents per share payable Jun 29 to stockholders of record at the close of business on Jun 1.

The company bought back 4.37 million shares for $423 million and has worth $1.379 billion remaining under its $2-billion repurchase authorization.

2018 Outlook Reiterated

The company expects 2018 revenues of $45-$46 billion, beside an adjusted EBIDTA of $8.45-$8.75 billion, EPS of $8.50-$9 and capital expenditures of about $3.5 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to seven lower.

HCA Healthcare, Inc. Price and Consensus

 

VGM Scores

At this time, HCA has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.

Outlook

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




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