Molina Healthcare's (MOH) Q3 Earnings: Is a Beat in Store?

Molina Healthcare, IncMOH is scheduled to report third-quarter 2018 results on Oct 31. Last reported quarter, the company delivered a positive earnings surprise of 106.42%.

What to Expect for Q3 Earnings?

The Zacks Consensus Estimate for the company's quarterly earnings is pegged at $1.65, up 46% year over year.

Molina Healthcare has possibly taken more initiatives to optimize its capital structure as well as boost its business portfolio. As a result, operational efficiency might have improved. In the third quarter, the Medicaid product line has also likely seen better results. Medical costs are estimated to have stabilized during the period.

Per Molina Healthcare, costs are expected to rise in the second half of the year due to higher administrative costs on timing of technology, marketing and transition expenses in places like Florida and New Mexico.

However, the company's revenues are anticipated to suffer due to lower Marketplace revenue because of declining membership. The Zacks Consensus Estimate for the same is pegged at $4.7 billion, down 6.6% year over year.

The company is projected to have expanded its margins in Florida, courtesy of its strong Marketplace and Medicare businesses in this important managed care market.

The company predicted that its businesses would consistently perform well in the third and fourth quarters, irrespective of the seasonal impact of the Marketplace business. Further, Molina Healthcare estimates the medical care ratio for the second half to be in the upper 70s as utilization is back-end loaded because of product design and shifts in membership mix plus acuity.

What the Quantitative Model States

Our proven model conclusively shows that Molina Healthcare is likely to beat on earnings this to-be-reported quarter. This is because the stock needs to have 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.

Earnings ESP : Molina Healthcare has an Earnings ESP of +3.76%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

Molina Healthcare, Inc Price and EPS Surprise

Molina Healthcare, Inc Price and EPS Surprise | Molina Healthcare, Inc Quote

Zacks Rank : Molina Healthcare sports a Zacks Rank of 1, which increases the predictive power of ESP. Further, combined with a positive ESP, the stock's chances of beating estimates are significantly higher.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the medical sector with the perfect combination of elements to also 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 +12.53%. 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.

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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 Nasdaq, Inc.

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

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