) is set to report its second quarter 2013 financial results
after the closing bell on Jul 25. Last quarter, it posted a
+146.15% surprise. Let's see how things are shaping up for this
Growth Factors this Past Quarter
Molina has been witnessing rising medical care costs, which
are compressing margins. The company's high operating expenses
also pose a risk to the operating leverage. Any substantial
elevation in operating expenses and medical costs could heavily
weigh on the margins and bottom line. Moreover, investment
income, a prime component of Molina's revenues, has been
declining since 2007, primarily due to lower interest rates.
Our proven model does not conclusively show that Molina is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
That is because the Most Accurate Estimate stands at 29 cents,
while the Zacks Consensus Estimate is higher at 31 cents. That is
a difference of -6.45%.
Zacks Rank #1 (Strong Buy):
Molina carries a Zacks Rank #1 (Strong Buy). This increases the
predictive power of the ESP. However, this combined with a
negative ESP makes prediction difficult. We caution against
stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into
the earnings announcement.
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:
) - Earnings ESP of +3.37% and Zacks Rank #1 (Strong Buy)
) - Earnings ESP of +1.63% and Zacks Rank #1 (Strong Buy)
) - Earnings ESP of +0.73% and Zacks Rank #2 (Buy)
AETNA INC-NEW (AET): Free Stock Analysis
HUMANA INC NEW (HUM): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis
WELLPOINT INC (WLP): Free Stock Analysis
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