Tenet Healthcare (THC) Q3 Earnings: What's in the Cards?

Shutterstock photo

Tenet Healthcare Corporation THC will report third-quarter 2018 results on Nov 5 after market close. The Zacks Consensus Estimate for the stock's earnings stands at 11 cents against the loss of 17 cents suffered in the prior-year quarter.

The company's third-quarter performance is likely to drive growth on the back of Conifer segment, its cost restructuring initiatives plus other key initiatives.

Let's see how things are shaping up prior to this announcement.

Factors to be Considered for the Third Quarter

In the third quarter, Tenet Healthcare is likely to witness decreased revenues because of reduced admissions. The Zacks Consensus Estimate for revenues stands at $4.3 billion, down 4.5% year over year. Also, total admissions stand at 161 million, down 11.5% from the year-ago quarter.

The company's top line would also likely to suffer from its divestitures, which would again lower the admissions. The consensus mark for adjusted patient admissions in the quarter to be reported is pegged at 271 million, down 18.4% year over year.

The company expects its Conifer segment to deliver $166 million of EBITDA at the midpoint. Tenet Healthcare even increased Conifer's outlook by $20-$355 million for the entire year.

However, the company doesn't expect its EBITDA to be stronger in the second half of the year, which has been the case over the past few years, mainly due to the sale of Tenet and Conifer's incentive fee revenues.

Moreover, the company's cost-reduction initiatives are likely to be consistent in the to-be reported quarter. For the full year, the company anticipates to realize about $195 million of savings.

The company's cash flow is also estimated to improve in the third quarter. After distributing profits to major partners and adjusting cash restructuring costs, the company projects to generate around $240- $475 million of cash during the latter six months of 2018.

The company even expects to reduce debt by $70 million during the third and fourth quarters.

What the Quantitative Model States

Our proven model doesn't conclusively show that Tenet Healthcare is likely to beat on earnings this to-be-reported quarter. This is because the stock has the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here.

Earnings ESP: Tenet Healthcare has an Earnings ESP of -12.70%. This is because the Most Accurate Estimate is pegged at 10 cents, lower than the Zacks Consensus Estimate of 11 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

Tenet Healthcare Corporation Price and EPS Surprise

Tenet Healthcare Corporation Price and EPS Surprise | Tenet Healthcare Corporation Quote

Zacks Rank: Tenet Healthcare carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company's negative ESP leaves surprise prediction inconclusive as only a solid ESP is needed to be confident about a likely earnings surprise.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the medical sector with the perfect combination of elements to surpass estimates in the next releases are as follows:

Affimed N.V. AFMD is slated to release third-quarter earnings figures on Nov 6. This stock has an Earnings ESP of +5.88% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Alnylam Pharmaceuticals, Inc. ALNY has an Earnings ESP of +12.54%. This #3 Ranked company is set to report third-quarter earnings on Nov 6.

Humana Inc HUM is scheduled to announce third-quarter 2018 earnings performance on Nov 7. The stock has an Earnings ESP of +2.22% and a Zacks Rank of 2.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Alnylam Pharmaceuticals, Inc. (ALNY): Free Stock Analysis Report

Affimed N.V. (AFMD): Free Stock Analysis Report

Humana Inc. (HUM): Free Stock Analysis Report

Tenet Healthcare Corporation (THC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: ALNY , AFMD , HUM , THC

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?