Estimates for Anthem, Inc. (ANTM - Free Report) have been revised upward over the past 30 days, reflecting analysts' optimism on the stock. The stock has seen the Zacks Consensus Estimate for 2018 and 2019 earnings move 1.2% and 2.9% north, respectively.
Shares of this Zacks Rank #2 (Buy) company have rallied nearly 24 % in the past year, almost in line with the industry’s growth of 18.2%. It is well poised for growth, which is also apparent from its Value Score of A. Our research shows that stocks with a Value Style Score of A or B, when combined with a bullish Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best opportunities in the value investment space.
Now, let’s focus on some important factors that make Anthem stock investors’ favorite.
Solid Results and Improving Top-line: The company has been performing really well over the past few quarters on the back of operational excellence. Its impressive top line witnessed a 7-year CAGR of 6.3% (2010-2017). The momentum continued in the first nine months of 2018, with the metric up by 2% year over year, primarily driven by buyouts and alliances along with efforts for improving net investment income. We expect the top-line improvement to continue, given the company’s strong business growth.
Positive Earnings Surprise History: The company boasts an encouraging earnings surprise history, the average trailing four-quarter beat being 5.11%. This highlights its operational excellence.
Raised 2018 Guidance: Following solid results, Anthem lifted its earnings guidance for 2018. It now expects adjusted net income per share to be more than $15.60, up from the previous projection of more than $15.40. A strong earnings guidance instills investors’ confidence in the company.
Acquisitions: Anthem’s acquisitions have led to inorganic growth. The purchase of HealthSun and America's 1st Choice helped the company increase its revenues. It has also acquired Aspire Health, which remains a positive for the company. Its tie-up with Blue Cross Blue Shield of Minnesota is expected to go live in the fourth quarter and serve 375,000 Medicaid and dual-eligible members.
Valuation: Shares of Anthem are underpriced at the moment, which remains attractive for investors. It has a trailing 12-month price-to-earnings ratio of 16.72, falling below the industry’s average of 17.82.
Growth Projections: The Zacks Consensus Estimate for earnings per share in the current year is pegged at $15.66, representing a year-over-year increase of 30.07% on 2.78% higher revenues of $91.6 billion.
For 2019, the Zacks Consensus Estimate for earnings per share stands at $17.59 on $98.1 billion revenues, translating into a respective 12.32% and 7.15% year-over-year rise.
Other Key Picks
Investors interested in the medical-HMO industry might also take a look at some other top-ranked stocks like Molina Healthcare, Inc. (MOH - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Humana Inc. (HUM - Free Report) .
Molina Healthcare provides Medicaid-related solutions to meet the healthcare needs of low-income families and individuals as well as assist state agencies in their administration of the Medicaid program across the United States. It currently sports a Zacks Rank of 1 (Strong Buy), the average four-quarter beat being nearly 82.55% in the last four quarters.
UnitedHealth operates as a diversified healthcare company in the United States. With a Zacks Rank of 2, the company managed to pull off a trailing four-quarter surprise of 3.67%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Humana operates as a health and well-being company in the United States. It currently has a Zacks Rank #2, the average four-quarter beat being 4.73%.
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