Back to top

Image: Bigstock

Molina (MOH) Up 11.3% Since Last Earnings Report: Can It Continue?

Read MoreHide Full Article

A month has gone by since the last earnings report for Molina (MOH - Free Report) . Shares have added about 11.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Molina due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Molina Healthcare’s Q3 Earnings Surpass, Increase Y/Y

Molina Healthcare’s third-quarter 2019 adjusted earnings of $2.80 per share surpassed the Zacks Consensus Estimate by 3.3%. Moreover, the bottom line improved 2.9% year over year, mainly owing to lower expenses.

Also, for the quarter under review, total revenues of $4.2 billion came ahead of the Zacks Consensus Estimate by 2.9%. However, the top line declined 9.7% year over year, mainly due to lower Medicaid membership.

Quarterly Operational Update

The company’s net income totaled $175 million, down 11.2% year over year.
Total operating expenses decreased about 10.2% year over year to $3.9 billion. This improvement was attributable to lower medical care costs and no health insurer fees as well as cost of service revenues.

For the third quarter, medical care cost was down 7% year over year to nearly $3.5 billion.

Molina Healthcare’s interest expenses dropped 15.4% year over year to $22 million owing to constant repayment of convertible notes.

Total membership by Government Program for 2019 stands at 3.3 billion, down 16.3% year over year.

During the third quarter, Molina Healthcare received $430 million of dividends from regulated health plan subsidiaries.

Financial Update

As of Sep 30, 2019, Molina Healthcare’s cash and cash equivalents saw a reduction of 5.2% to $2.7 billion from the level at 2018 end.

Total assets fell 6.3% from 2018 end to $6.7 billion.

The company’s shareholder equity improved nearly 11.2% from the figure at 2018 end to $1.8 billion.

For the first nine months of of 2019, net cash outflow from operating activities stands at $398 million.

2019 Guidance

Following third-quarter results, the company hiked its 2019 outlook. It now expects earnings in the range of $11.30-$11.55 per share, indicating a rise from the prior estimate of $11.20-$11.50.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Molina has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Molina Healthcare, Inc (MOH) - free report >>

Published in