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Community Health (CYH) Up 8.3% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Community Health Systems, Inc. (CYH - Free Report) . Shares have added about 8.3% in that time frame.

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

Community Health (CYH - Free Report) Posts Earnings in Q1, Revenues Top

Community Health Systems delivered adjusted income of 13 cents per share in the first quarter of 2018, faring better than the Zacks Consensus Estimate of a loss of 26 cents.  The bottom line surged nearly 86% year over year.

Quarterly Operational Update

In the reported quarter, net operating revenues were $3.7 billion, which surpassed the Zacks Consensus Estimate by 1.6% but decreased by 17.8% year over year.

The first quarter witnessed a decrease of 2.4% in total admissions and a fall of 1.9% in adjusted admissions, when compared with the year-ago period.

Total operating costs and expenses were $3.5 billion, down 21.1% year over year.

Financial Update

Total assets at quarter end were $17.3 billion, dipping 0.8% from year-end 2017 level.

Cash and cash equivalents decreased 24.7% to $424 million from year-end 2017.

Cash flow from operations was $106 million for the reported quarter, declining 56.2% year over year.

The company has a long-term debt of $13.8 billion as of Mar 31, 2018, dipping 0.28% from 2017-end level.

2018 Guidance

Loss from continuing operations per share is expected to lie in between $1.50 and $1.10.

Community Health estimates the net operating revenues to lie the range of $13.6-$13.9 billion.

The company projects an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for 2018 in the range of $1.55-$1.65billion.

Weighted-average diluted shares are expected to be in the range of 113-114 million.

Net cash from operations is estimated between $700 million and $800 million while capital expenditure is projected between $475 million and $575 million

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to six lower. Last month, the consensus estimate has shifted downward by 29.1% due to these changes.

Community Health Systems, Inc. Price and Consensus

 

VGM Scores

At this time, CYH has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was  allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 equally suitable for growth and momentum investors than value investors.

Outlook

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




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