HCA Holdings (HCA) Q2 Earnings: Uncertainty In The Cards?

HCA Holdings Inc. (NYSE:HCA) is set to report second-quarter 2016 results on Jul 28. Last quarter, the company posted earnings of $1.71 per share, which comfortably beat the Zacks Consensus Estimate by 22 cents.

We note that HCA surpassed the Zacks Consensus Estimate in the last four quarters, by an average of 9.04%.

Let’s see how things are shaping up for this quarter.

Factors at Play

HCA is expected to benefit from the growing admission rate and improving payer mix based on the prolonged implementation of the Affordable Care Act (Obamacare). Notably, in the first quarter, same facility Medicare admissions and equivalent admissions increased 0.8% and 2.1%, respectively.

Same facility Medicaid admissions and equivalent admissions also increased 1.4% and 4.3%, respectively, in this quarter.

Moreover, increasing investments in trauma, cardiology and rehab services are forecasted to drive growth in the long run.

Earnings Whispers

Our proven model does not conclusively show that HCA is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), #2 or at least #3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: HCA currently has an Earnings ESP of -1.94%. This is because the Most Accurate estimate of $1.52 is lower than the Zacks Consensus Estimate of $1.55.

Zacks Rank: HCA has a Zacks Rank #3 (Hold) which increases the possibility of an earnings beat. However, when combined with a -1.94% ESP, it makes surprise prediction difficult.

Meanwhile, 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.

Stocks to Consider

Here are a few stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Nektar Therapeutics (NASDAQ:NKTR) with an Earnings ESP of +50.00% and a Zacks Rank #1.

CytRx Corp. (NASDAQ:CYTR) with an Earnings ESP of +15.00% and a Zacks Rank #1.

Zoetis Inc. (NYSE:ZTS) with an Earnings ESP of +2.27% and a Zacks Rank #2.