U.S. health insurer,
UnitedHealth Group Inc.
) is scheduled to report its second-quarter 2014 results before the
opening bell on Jul 17.
In the last quarter, this health insurer delivered a 0.92% positive
earnings surprise. The company delivered a positive earnings
surprise over the trailing four quarters, with an average beat of
Will UnitedHealth Group be able to keep its earnings streak alive
this quarter? Let's see what factors might have influenced
the earnings report this time around.
Factors Likely to Influence Q2 Results
Earnings in the quarter will be primarily driven higher premium
from new Medicaid contracts entered into by the company over the
past 12 months.
The company's health service segment branded as Optum will also
accrue to the quarter's earnings. Significant revenue contribution
is expected from Optum's sub-segments - OptumHealth and
OptumInsight - wherein the company has made targeted investments to
seek opportunities in areas such as consumer engagement, consumer
distribution services, next generation analytics.
However, other factors such as nondeductible insurance taxes,
Affordable Care Act prescribed Medicare Advantage funding pull
backs and commercial underwriting changes will drag UnitedHealth's
Our proven model does not conclusively show that UnitedHealth
Group's is likely to beat the Zacks Consensus Estimate in the
second quarter. That is because a stock needs to have both a
and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold)
for this to happen. But this is not the case here as elaborated
UnitedHealth Group's Most Accurate estimate is pegged at $1.21 per
share, which is below the Zacks Consensus Estimate of $1.25. The
Earnings ESP is thus -3.20%.
UnitedHealth Group has a Zacks Rank #4 (Sell). We caution against
stocks with Zacks Rank #4 and 5 going into an earnings
announcement, especially when the company is seeing negative
Other Stocks to Consider
Here are some companies you may want to consider as our model shows
that these have the right combination of elements to post an
earnings beat this quarter:
Aetna Corp. (
), Earnings ESP of +2.5% and Zacks Rank #2.
Lincoln National Corporation
), Earnings ESP of +2.96% and a Zacks Rank #2.
), Earnings ESP of +2.16% and a Zacks Rank #3.
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AETNA INC-NEW (AET): Free Stock Analysis Report
CIGNA CORP (CI): Free Stock Analysis Report
LINCOLN NATL-IN (LNC): Free Stock Analysis
UNITEDHEALTH GP (UNH): Free Stock Analysis
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