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HCA Healthcare Pre-Q4 Earnings: Golden Opportunity or Fool's Gold?
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HCA Healthcare, Inc. (HCA - Free Report) is scheduled to report fourth-quarter 2024 results on Jan. 24, before the opening bell. The Zacks Consensus Estimate for fourth-quarter earnings per share of $5.99 indicates a 1.5% increase from the prior-year figure of $5.90.
Stay up-to-date with all quarterly releases: See ZacksEarnings Calendar.
The earnings estimate has witnessed downward revisions over the past 60 days. The consensus estimate for fourth-quarter revenues of $18.1 billion indicates 4.6% growth from the year-ago reported figure.
Image Source: Zacks Investment Research
HCA Healthcare beat the consensus estimate for earnings in each of the prior four quarters, with the average being 9%.
However, our proven model does not conclusively predict an earnings beat for HCA Healthcare this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat, but that’s not the case here.
Earnings ESP: HCA Healthcare has an Earnings ESP of -0.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: HCA Healthcare currently has a Zacks Rank #4 (Sell).
HCA Healthcare’s fourth-quarter revenues are likely to have benefited from rising patient volumes, occupancy rates and other associated metrics. Continued network expansion should have aided HCA in capturing rising patient volumes in the fourth quarter. As seniors have resumed elective procedures that were previously postponed due to pandemic-related constraints, these metrics are expected to have benefited. Coupled with rising revenue per equivalent admission, the growing volumes will continue boosting the hospital company’s top line.
An aging U.S. population and rising disease cases are bound to boost the demand for hospital services. HCA Healthcare continues to increase its capabilities through strategic acquisitions to address that growing demand, which will support its volume.
Considering the fourth quarter, the Zacks Consensus Estimate for admissions indicates 3.1% year-over-year growth, while the same for equivalent patient days hints at a 2.3% increase. The consensus mark for revenue per equivalent admission indicates a 1.6% rise from the year-ago period. Additionally, the consensus estimate for Medicare and Medicaid revenues in the fourth quarter suggests 2% and 12% year-over-year increases, respectively. Better inpatient capacity management is expected to benefit the fourth-quarter results. Outpatient surgery cases are expected to decline by nearly 1% in the fourth quarter.
Improved payer mix is expected to have aided commercial volumes in the fourth quarter of 2024. As private insurance customers pay more than Medicare or Medicaid, better commercial volumes are likely to offset any negative impact due to the Medicaid redetermination process.
However, investors should keep in mind that rising patient volumes will also boost HCA’s expenses, especially in salaries and benefits, supply costs and other operating costs. This is likely to have trimmed its margins. For the fourth quarter of 2024, our model suggests a nearly 5% year-over-year increase in its total operating expenses.
Price Performance
HCA Healthcare stock has gained 7.7% compared with the industry’s rise of 6.4% in the past year. The sector and the S&P 500 Index declined 7.2% and grew 24.7%, respectively, in the same period. Compared with HCA, Universal Health Services, Inc. (UHS - Free Report) , one of its peers, has gained 18.4% in the same time frame, while Acadia Healthcare Company, Inc. (ACHC - Free Report) has lost 48.7%.
HCA One-Year Price Performance
Image Source: Zacks Investment Research
Now, let’s look at the value HCA Healthcare offers investors at current levels.
The company’s valuation looks a bit stretched compared with the industry average. Currently, HCA is trading at 12.46X forward 12 months earnings, slightly above the industry’s average of 12.12X, indicating investor confidence.
Image Source: Zacks Investment Research
Investor Considerations
HCA Healthcare continues to experience robust revenue growth, driven by increasing admissions, a comprehensive service suite, and a strong treatment network across the United States, with a 6.6% CAGR over the past decade (2013-2023). The recovery of elective procedures and strategic investments in clinical systems and digital capabilities support long-term growth, with 2024 revenues projected to rise 3.8% from 2023.
However, rising operating expenses and declining outpatient surgery cases could limit short-term stock performance. Investors should monitor these factors closely.
Conclusion
While HCA’s long-term outlook remains promising, it might not be the right time to buy the stock. Investors should stay patient and wait for a better entry point, as buying now could limit potential gains. Current shareholders may want to consider locking in profits, given that the stock appears overvalued and has minimal room for further growth in the short term.
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HCA Healthcare Pre-Q4 Earnings: Golden Opportunity or Fool's Gold?
HCA Healthcare, Inc. (HCA - Free Report) is scheduled to report fourth-quarter 2024 results on Jan. 24, before the opening bell. The Zacks Consensus Estimate for fourth-quarter earnings per share of $5.99 indicates a 1.5% increase from the prior-year figure of $5.90.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The earnings estimate has witnessed downward revisions over the past 60 days. The consensus estimate for fourth-quarter revenues of $18.1 billion indicates 4.6% growth from the year-ago reported figure.
Image Source: Zacks Investment Research
HCA Healthcare beat the consensus estimate for earnings in each of the prior four quarters, with the average being 9%.
HCA Healthcare, Inc. Price and EPS Surprise
HCA Healthcare, Inc. price-eps-surprise | HCA Healthcare, Inc. Quote
Earnings Whispers
However, our proven model does not conclusively predict an earnings beat for HCA Healthcare this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat, but that’s not the case here.
Earnings ESP: HCA Healthcare has an Earnings ESP of -0.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: HCA Healthcare currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Factors Likely to Influence HCA’s Q4 Results
HCA Healthcare’s fourth-quarter revenues are likely to have benefited from rising patient volumes, occupancy rates and other associated metrics. Continued network expansion should have aided HCA in capturing rising patient volumes in the fourth quarter. As seniors have resumed elective procedures that were previously postponed due to pandemic-related constraints, these metrics are expected to have benefited. Coupled with rising revenue per equivalent admission, the growing volumes will continue boosting the hospital company’s top line.
An aging U.S. population and rising disease cases are bound to boost the demand for hospital services. HCA Healthcare continues to increase its capabilities through strategic acquisitions to address that growing demand, which will support its volume.
Considering the fourth quarter, the Zacks Consensus Estimate for admissions indicates 3.1% year-over-year growth, while the same for equivalent patient days hints at a 2.3% increase. The consensus mark for revenue per equivalent admission indicates a 1.6% rise from the year-ago period. Additionally, the consensus estimate for Medicare and Medicaid revenues in the fourth quarter suggests 2% and 12% year-over-year increases, respectively. Better inpatient capacity management is expected to benefit the fourth-quarter results. Outpatient surgery cases are expected to decline by nearly 1% in the fourth quarter.
Improved payer mix is expected to have aided commercial volumes in the fourth quarter of 2024. As private insurance customers pay more than Medicare or Medicaid, better commercial volumes are likely to offset any negative impact due to the Medicaid redetermination process.
However, investors should keep in mind that rising patient volumes will also boost HCA’s expenses, especially in salaries and benefits, supply costs and other operating costs. This is likely to have trimmed its margins. For the fourth quarter of 2024, our model suggests a nearly 5% year-over-year increase in its total operating expenses.
Price Performance
HCA Healthcare stock has gained 7.7% compared with the industry’s rise of 6.4% in the past year. The sector and the S&P 500 Index declined 7.2% and grew 24.7%, respectively, in the same period. Compared with HCA, Universal Health Services, Inc. (UHS - Free Report) , one of its peers, has gained 18.4% in the same time frame, while Acadia Healthcare Company, Inc. (ACHC - Free Report) has lost 48.7%.
HCA One-Year Price Performance
Image Source: Zacks Investment Research
Now, let’s look at the value HCA Healthcare offers investors at current levels.
The company’s valuation looks a bit stretched compared with the industry average. Currently, HCA is trading at 12.46X forward 12 months earnings, slightly above the industry’s average of 12.12X, indicating investor confidence.
Image Source: Zacks Investment Research
Investor Considerations
HCA Healthcare continues to experience robust revenue growth, driven by increasing admissions, a comprehensive service suite, and a strong treatment network across the United States, with a 6.6% CAGR over the past decade (2013-2023). The recovery of elective procedures and strategic investments in clinical systems and digital capabilities support long-term growth, with 2024 revenues projected to rise 3.8% from 2023.
However, rising operating expenses and declining outpatient surgery cases could limit short-term stock performance. Investors should monitor these factors closely.
Conclusion
While HCA’s long-term outlook remains promising, it might not be the right time to buy the stock. Investors should stay patient and wait for a better entry point, as buying now could limit potential gains. Current shareholders may want to consider locking in profits, given that the stock appears overvalued and has minimal room for further growth in the short term.