HCA Holdings, Inc. (HCA) has revised its guidance for fourth-quarter 2014. This medical hospital industry stock now expects adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $7.4 billion for the fourth quarter, higher than the previously guided range of $7.25–$7.35 billion.
The company also stated that it expects a $68 million increase in Medicaid revenues in the fourth quarter. This rise will be due to the reversal of the Texas Medicaid Waiver Program adjustment to reduce revenues which were recorded in the third quarter 2014.
HCA Holdings expects same facility admissions in the fourth quarter to increase by 5% and same facility emergency room visits by 10.5% compared with the year-ago quarter.
Additionally, HCA Holdings completed the previously authorized share repurchase program of $1.0 billion with the purchase of 14 million shares during the fourth quarter. As of Dec 31, 2014, the company had $420.5 million shares outstanding. This continued process of share buybacks is expected to boost the bottom line.
The Zacks Consensus Estimate for revenues for the fourth quarter is $9.5 billion, up 6.7% year over year. For full year 2014, it is $36.8 billion. Meanwhile, the Zacks Consensus Estimate for earnings per share for the fourth quarter is $1.18 per share, reflecting an increase of 37.2% year over year whereas for the full year it is $4.56 per share.
HCA Holdings is expected to report its fourth quarter and 2014 results on Feb 3, 2015. Our proven model shows that HCA Holdings is likely to beat earnings because it has the right combination of two key ingredients – Zacks Rank and Earnings ESP.
Currently, HCA Holdings carries a Zacks Rank #3 (Hold), which in combination with an earnings ESP of +8.48%, makes us confident of an earnings beat this release. Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate.
HCA Holdings is expected to provide its 2015 guidance along with its fourth quarter earnings release.
Other Stocks to Consider
Better-ranked stocks in the same sector include MEDNAX, Inc. (MD), Tenet Healthcare Corp. (THC) and VCA Inc. (WOOF). All these stocks hold a Zacks Rank #2 (Buy).
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