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Is a Beat in Store for Humana (HUM) Stock in Q3 Earnings?

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Humana Inc.’s (HUM - Free Report) third-quarter 2018 results are scheduled to be reported on Nov 7, 2018. In the last reported quarter, the company came up with a positive earnings surprise of 4.49% led by solid strategies, Medicare Advantage enrollment growth, lower inpatient medical utilization in Retail segment and impressive operating cost efficiencies.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $4.29, up 26.5% year over year.

Other Factors

The company’s top line is likely to increase on the back of Medicare Advantage as well as by strong segmental performances. The consensus mark for the metric stands at $13.9 billion, up 5% year over year.

The company’s Retail segment would likely continue with its winning streak owing to higher revenues from its individual and group Medicare Advantage business as well as increased per-member premiums for a few segmental products.

Humana’s Group and Specialty segment would likely witness growth in revenues during the third quarter, boosted by premiums across most business lines in the segment.  

Humana expects its core health trend to be 6% (plus or minus 50 basis points) along with the pre-tax income guidance to remain the same for the entire year.

The overall Medical membership of the company stands at $16.5 billion, up by 18.3% from the prior-year quarter.

Per the company, the reinsurance transactions would have a de minimis impact on its pretax for the second half of the year but would leave a significant effect on its benefit ratio. Humana also estimates the third-quarter adjusted EPS to be around 31% of its full-year tally.

What the Quantitative Model States

Our proven model conclusively shows that Humana is likely to beat on earnings this to-be-reported quarter. This is because the stock needs to have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Humana has an Earnings ESP of +2.22%. This is because the Most Accurate Estimate is pegged at $4.39, higher than the Zacks Consensus Estimate of $4.29. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Humana Inc. Price and EPS Surprise


Humana Inc. Price and EPS Surprise | Humana Inc. Quote

Zacks Rank: Humana carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. Further, a positive ESP significantly raises the odds of a likely earnings surprise.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the medical sector with the perfect combination of elements to also surpass estimates in the next releases are as follows:

BioDelivery Sciences International, Inc. is slated to release third-quarter earnings figures on Nov 8. This stock has an Earnings ESP of +1.89% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

National Vision Holdings, Inc. (EYE - Free Report) has an Earnings ESP of +6.12%. This #1 Ranked company is set to report third-quarter earnings on Nov 13.

CRISPR THERAPTC (CRSP - Free Report) is scheduled to announce third-quarter 2018 earnings performance on Nov 14. The stock has an Earnings ESP of +3.53% and a Zacks Rank of 1.

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