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What's in the Offing for Humana's (HUM) Earnings in Q3?

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Humana Inc.’s HUM third-quarter 2019 results are scheduled to be reported on Nov 6, 2019.

The Zacks Consensus Estimate for earnings is pegged at $4.58, indicating no change from the year-ago reported figure. The consensus mark for revenues of $16.1 billion suggests an uptick of 13.7% from the prior-year reported number.

In the last reported quarter, the company’s operating earnings per share of $6.05 beat the Zacks Consensus Estimate by 15.5%. The bottom line also improved 52.8% year over year. This upside can primarily be attributed to Medicare Advantage membership growth and higher revenues.

The company boasts a stellar earnings surprise history, having surpassed estimates in all the trailing four quarters, the average being 7.79%.

Let’s see how things are shaping up prior to this announcement:

The company’s expected third-quarter adjusted EPS is equal to 26% of the full-year earnings number, which is approximately $4.58. This might have been affected by a negative impact of weekday seasonality on its bottom line in the third quarter and escalating investment spending.

Moreover, specialty membership of the company is likely to have faced a decline. The Zacks Consensus Estimate for the same implies a 3.7% dip from the year-earlier reported figure.

However, the results are expected to have been favored by increasing revenues. Humana’s strong Medicaid and Medicare lines of businesses are likely to have aided its top line. Its Medicare line of business too might have witnessed growth on the back of higher members.

Additionally, total investment income for the to-be-reported quarter might have noticed an upside. The consensus estimate for the same hints at a 27.3% rise from the year-ago reported figure.

Humana is also likely to have retained its capital deployment efforts through share buybacks and dividend payouts in the third quarter. It is most likely to have witnessed stable cash flow in the period owing to operating outperformance as well as a solid impact of working capital from better individual Medicare Advantage membership.

However, the company might have incurred escalated operating expenses due to growth-related investments and benefit expenses.

What the Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Humana this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Humana has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $4.58.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Humana Inc. Price and EPS Surprise

Humana Inc. Price and EPS Surprise

Humana Inc. price-eps-surprise | Humana Inc. Quote

Zacks Rank: Humana carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult for the stock this time around.

Stocks to Consider

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

Adamas Pharmaceuticals, Inc. is set to report third-quarter earnings on Nov 7. The stock has a Zacks Rank of 3 and an Earnings ESP of +0.67%.

AmerisourceBergen Corporation ABC is slated to announce third-quarter earnings on Nov 7. The stock has an Earnings ESP of +0.55% and is Zacks #3 Ranked.

Aurora Cannabis Inc. ACB is set to report third-quarter earnings on Nov 11. It is a Zacks #3 Ranked stock and has an Earnings ESP of +25.76%.
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