The Q3 earnings season, projected to be the first quarter to see positive earnings growth after five quarters of decline, is picking up pace. Medical is one of the nine broader sectors among the 16 Zacks sectors in the S&P 500 cohort that is expected to report earnings growth in the third quarter. The sector is likely to report earnings growth of 3.7% on revenue improvement of 7.4%.
As per the latest Earnings Trend Report, 116 S&P 500 members have released their quarterly numbers as of Oct 21. Notably, reported earnings are up 3.3% year over year on a 1.8% increase in revenues and the beat ratio is 80.2% for earnings and 62.9% for revenues.
Coming to hospital stocks, hospital is an important component in the Medical universe and is expected follow the same earnings growth trajectory in the quarter. Here, we take a sneak peek into two hospital stocks scheduled to report their third-quarter figures on Oct 27:
Nashville, TN-based HCA Holdings Inc (NYSE:HCA) is one of the largest hospital operators in the U.S. Last quarter, the company posted adjusted earnings of $1.66, crushing the Zacks Consensus Estimate by 11 cents.
One of the major highlights for HCA Holdings in the quarter was the recently inked partnership with Mobile Heartbeat which will help the company enhance patient care by improving clinical workflow and providing secure communications.
Additionally, increasing admission rate in same facility medicare and equivalent admissions, solid inpatient and outpatient surgery volumes and growing investments in trauma, cardiology and rehab services are likely to fortify the company’s market position.
However, our proven model does not conclusively show that the company is likely to beat earnings, given the combination of a Zacks Rank #3 (Hold) and an Earnings ESP of -2.10%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
That is because, as per our model, a stock needs to have both a positive earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat earnings. Simultaneously, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
We also note that the results of HCA Holdings compared favorably with the Zacks Consensus Estimate in the last four quarters, the average beat being 10.44%.
Sunrise, FL-based MEDNAX Inc (NYSE:MD) provides neonatal, anaesthesia, maternal-fetal and other physician and management services. In the last quarter, MEDNAX posted adjusted earnings of $1.05, in line with the Zacks Consensus Estimate.
In the recent past, the company witnessed several remarkable developments, which includes the takeover of FL-based maternal-fetal Practice, Nevada-based ‘Associated Anesthesiologists’, South Carolina-based ‘Medical Anesthesia Consultants’, VA-based pediatric cardiology practice and more. We believe MEDNAX diversifies its core business and fortifies its market position through strategic tie-ups and acquisition of practices in various locations.
Nevertheless, our proven model does not conclusively show that the company is likely to beat earnings, given the combination of a Zacks Rank #3 and earnings ESP of 0.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.
We note that MEDNAX’s results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 1.30%.
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MEDNAX INC (MD): Free Stock Analysis Report
HCA HOLDINGS (HCA): Free Stock Analysis Report
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