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Will Expenses Hurt WellCare Health's (WCG) Q3 Earnings?

WellCare Health Plans, Inc. 's WCG is scheduled to release third-quarter 2018 results on Oct 30. Last reported quarter, the company delivered a positive earnings surprise of nearly 21.78%.

What to Expect for Q3 Earnings?

The Zacks Consensus Estimate for the company's earnings is likely to be $3.10, down 24.1% year over year. The bottom line is likely to suffer because of rising selling, general and administrative costs. The company is expected to have consistently invested in boosting capabilities and infrastructure as a result of which, costs are expected to rise.

Meanwhile, the company is likely to witness top-line growth in the to-be reported quarter, primarily driven by a rise in Medicaid membership. The Zacks Consensus Estimate for the same is pegged at $5.1 billion, up 14.9% year over year.

Continuing with its favorable momentum, WellCare Health's Medicaid business is likely to witness increased membership. The consensus estimate for Medicaid Membership stands at 3.9 billion, up 44.4% year over year.

The consensus mark for Medicare Advantage membership is projected at 540 million, up 9.8% year over year. Overall, the company's membership is predicted at 5.5 billion.

Lower tax rates owing to the Tax Cuts and Jobs Act are likely to have reduced the company's tax burden. This would further boost the bottom line.

The company closed its pending buyout of Meridian, which it expects to contribute more than $4.3 billion to revenues in 2018.

What the Quantitative Model States

Our proven model conclusively shows that WellCare Health 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 : WellCare Health has an Earnings ESP of +0.14%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

WellCare Health Plans, Inc. Price and EPS Surprise

WellCare Health Plans, Inc. Price and EPS Surprise | WellCare Health Plans, Inc. Quote

Zacks Rank: WellCare Health carries a Zacks Rank #2, 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:

Anthem, Inc. ANTM is slated to release third-quarter earnings figures on Oct 31. This stock has an Earnings ESP of +1.69% and a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here .

Molina Healthcare, Inc MOH has an Earnings ESP of +3.76%. This #1 Ranked company is set to report third-quarter earnings on Oct 31.

Humana Inc. HUM is set to report third-quarter 2018 earnings performance on Nov 7. The stock has an Earnings ESP of +2.22% and is a Zacks #2 Ranked player.

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WellCare Health Plans, Inc. (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 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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