HCA Holdings Hits All-Time High, Minimally Affected by Reforms - Analyst Blog

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Driven by a strong momentum, shares of HCA Holdings Inc. ( HCA ) hit an all-time 52-week high of $57.77 on Jun 20. Notably, this leading for-profit hospital operator's shares have surged 22.1% since the beginning of 2014 and 12.1% after the company reported first-quarter results at the end of April.

Notably, HCA Holdings has delivered positive earnings surprises in 2 of the last 4 quarters, with an average beat of 3.1%. The momentum of this Zacks Rank #3 (Hold) stock has come on the back of the company's improved outlook.

Friday's closing price represented a robust one-year return of about 53.9% against a return of 23.3% clocked by the S&P 500 index. Average volume of shares traded over the last three months stands at approximately 2,836.5K.

Earnings Review

On Apr 29, HCA Holdings reported first-quarter 2014 earnings per share of 84 cents. Although it was a penny short of the Zacks Consensus Estimate, earnings were higher than the year-ago figure by 6.3%.

Despite higher operating and interest expenses, a 4.6% year-over-year jump in net revenue supported earnings before interest, taxes, depreciation and amortization (EBITDA) growth of 4.8% during the quarter.  The company's improved asset position was partially offset by higher debt and lower operating cash flow.

Rationale

Although higher leverage and cash flow position raises caution, HCA Holdings' same facility revenues and admissions remain stable. Moreover, there was minimal adverse effect of the recent healthcare reform in the U.S. (Affordable Care Act implemented in Apr 2014). Growth of hospital admissions should be driven by increased insurance coverage. These positives instill confidence in investors about the company's growth prospects.

Meanwhile, some better-ranked healthcare stocks include Horace Mann Educators Corp. ( HMN ), WellCare Health Plans Inc. ( WCG ) and Select Medical Holdings Corp. ( SEM ), all of which sporta Zacks Rank #1 (Strong Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: WCG , HMN , SEM , HCA

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