Is WellPoint (WLP) Poised to Beat Earnings Estimates Again? - Analyst Blog

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We expect healthcare services company, WellPoint Inc. ( WLP ) to beat expectations when it reports second-quarter 2014 earnings on Jul 30, 2014.

Why a Likely Positive Surprise?

Our proven model shows that WellPoint is likely to beat earnings because it has the right combination of two key components.

Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +3.97%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank: WellPoint carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Ranks #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of WellPoint's Zacks Rank #2 and +3.97% ESP makes us confident of an earnings beat in the coming week.

What is Driving the Better-Than-Expected Earnings?

We believe that the company's increased capital deployment will boost shareholder return and earnings per share in the quarter. Moreover, the rollout of the exchanges and acquisition of the large state ASO contract are likely to aid membership, leading to an earnings beat this quarter.

The positive trend is seen in the trailing four-quarter average surprise of 12.35%, which was greatly aided by the 8.49% positive earnings surprise in the last reported quarter.

Other Stocks to Consider

WellPoint is not the only stock looking up this earnings season. We also see likely earnings beats coming from these three companies in the health care services space:


Gentiva Health Services Inc. ( GTIV ) has Earnings ESP of +37.50% and a Zacks Rank #1 (Strong Buy).

Health Net Inc. ( HNT ) has Earnings ESP of +1.79% and a Zacks Rank #2.

WellCare Health Plans, Inc. ( WCG ) has Earnings ESP of +3.47% and a Zacks Rank #3 (Hold).


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WELLPOINT INC (WLP): Free Stock Analysis Report

HEALTH NET INC (HNT): Free Stock Analysis Report

GENTIVA HEALTH (GTIV): Free Stock Analysis Report

WELLCARE HEALTH (WCG): Free Stock Analysis Report

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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 , Earnings , Stocks

Referenced Stocks: WLP , HNT , GTIV , WCG

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