eHealth, Inc. (EHTH - Free Report) , offering private online health insurance exchange services to its clients, has been witnessing higher commission revenue over a considerable period of time. Moreover, it registers solid revenues at its Medicare segment at the same time. We expect this positive trend to continue on the back of growth in approved Medicare members and an increase in non-commissioned revenues.
Banking on stronger commission revenues, the company’s top line is estimated to improve in the near term. In fact, the Zacks Consensus Estimate for current-year revenues is pegged at $226.9 million, reflecting a 31.7% year-over-year surge while for 2019, the consensus mark stands at $266.9 million, representing a rise of 17.6%.
Also, the company has been displaying an increase in Medicare applications in the last few years. Its Medicare Supplement applications can be anticipated to see better results in the short term owing to a substantial investment made in the GoMedigap business that was purchased in January earlier this year. Additionally, the insurance broker’s commitment toward this business has been steadily driving a better-than-expected performance.
When it comes to Medicare Advantage application business line, the company consistently witnessed more than a modest performance in the past many years and in the fourth quarter of 2018, growth is projected to accelerate. This probable upside is attributable to the annual enrollment period that will allow the broader Medicare population to enroll in the new plan.
The Zacks Rank #2 (Buy) insurance broker also projects a noticeable rise in enrollment volume from its digital marketing endeavors. The company’s marketing team has devised a significantly more efficient and cost-effective customer acquisition program through the aforementioned digital marketing measures that leverage the core assets.
With respect to the company’s liquidity position, it has been faring well pertaining to its cash & cash equivalents in the past several quarters and the momentum is likely to sustain in the future.
Shares of the company have gained a whopping 110.4% year to date against the industry’s decline of 1.2%. We believe, the aforementioned positives will drive the stock higher in the near term.
For the insurance broker, the Zacks Consensus Estimate for current-year earnings is pegged at $1.15, indicating a year-over-year surge of 251.3% and for 2019, the consensus estimate for the same stands at $1.55, depicting a 34.9% year-over-year jump.
Regarding its surprise history, the company delivered positive surprises in three of the trailing four reported quarters, the average beat being 29.03%.
Shares of eHealth are trading at a price-to-book multiple of 2.55, lower than the industry average of 4.42. Price to book value ratio is the best multiple for valuing life insurers because of large variations in earnings results from one quarter to the next. This ratio essentially measures a life insurer’s current market value, relative to what it would be worth if it chooses to shut down. Underpriced shares with solid fundamentals are profitable picks.
Other Stocks That Warrant a Look
Investors interested in other top-ranked stocks from the same space can also consider Arthur J. Gallagher & Co. (AJG - Free Report) , Brown & Brown, Inc. (BRO - Free Report) and Willis Towers Watson Public Limited Company (WLTW - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arthur J. Gallagher provides insurance brokerage, consulting and third-party claims settlement and administration services to entities in the United States and internationally. The company delivered positive surprises in three of the trailing four reported quarters with average beat of 2.82%.
Brown & Brown markets and sells insurance products in the United States, England, Canada, Bermuda and the Cayman Islands. The company pulled off earnings surprises in three of the previous four reported quarters, the average beat being 8.44%.
Willis Towers Watson operates as an advisory, broking and solutions company worldwide. The company surpassed estimates in all the preceding four reported quarters, the average being 7.13%.
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