Health Net, Inc.
) is set to report fourth-quarter 2013 results on Feb 11. Last
quarter, it posted a 40.68% positive surprise. Let's see how
things are shaping up for this announcement.
Factors this Past Quarter
In order to enhance its membership base, Health Net has been
spreading awareness about diabetes among Americans aged 65 and
above. Health Net also collaborated with the Centers for
Medicare & Medicaid Services (CMS) and the California
Department of Health Care Services (DHCS) to build awareness and
improve health conditions of the dual-eligibles in Los Angeles
and San Diego. These initiatives are expected to help Health Net
achieve a 2-3% increase in Medicare Advantage enrollment and a
4-6% rise in Medicaid enrollment in 2013. Moreover, the company's
foray into Arizona Medicaid in the last quarter is expected to
enhance customer base and hence revenue generation.
However, declining revenues from Health Net's government
contracts segment over the past few years is a concern, as the
company generates a substantial part of its revenues from this
segment. Adding to the woes, the ongoing uncertainties in the
global economy and challenging market conditions like high levels
of unemployment, diminished consumer confidence and volatility in
both the U.S. and international capital and credit markets might
weigh on the company's profitability in the fourth quarter.
Our proven model does not conclusively show that Health Net is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
(Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for
this to happen. That is not the case here as you will see
Zero Zacks ESP:
That is because both the Most Accurate estimate and the Zacks
Consensus Estimate stand at 28 cents. That is a difference of
Zacks Rank #3 (Hold):
Health Net's Zacks Rank #3 increases the predictive power of ESP
but when combined with a zero ESP makes surprise prediction
difficult. We caution against stocks with Zacks Rank #4 and 5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is witnessing negative or zero
estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
), with Earnings ESP of +4.55% and Zacks Rank #3.
), with Earnings ESP of +9.09% and Zacks Rank #3.
Tenet Healthcare Corp.
), with Earnings ESP of +17.65% and Zacks Rank #3.
HEALTHSOUTH CP (HLS): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
PHARMERICA CORP (PMC): Free Stock Analysis
TENET HEALTH (THC): Free Stock Analysis
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