Acadia Healthcare Company, Inc. (ACHC) is set to report its fourth-quarter and full year 2014 earnings results on Feb 11.
In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 9.5%. Moreover, over the trailing four quarters, the company has posted a positive average earnings surprise of 24.2%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Last quarter, Acadia exceeded expectations with its earnings and revenues comfortably beating the respective Zacks Consensus Estimate. Revenues and EPS had also surged an impressive 59% and 53%, respectively, on a year-over-year basis.
Acadia has significantly gained from the acquisition of PiC, an independent behavioral health provider that managed to bring 23 facilities and over 1,200 licensed beds to Acadia. PiC delivered a stellar performance in the last reported third quarter and management at Acadia seems to be progressing quite well in integrating PiC into the company.
Acadia is also growing organically, as is evident from the high same facility revenue growth of 9.9% recorded in the last quarter. The company added a meaningful number of new beds to its same facility base, accounting for a significant contribution to same facility revenue growth and margin expansion.
Given the solid performance by PiC, management raised its 2014 projection for adjusted EPS to the range of $1.52–$1.53 from the earlier guided $1.44–$1.46. The Zacks Consensus Estimate is currently pegged at $1.52, which is in line with the lower end of the management’s guidance.
Earnings Whispers
Our proven model does not conclusively show that Acadia Healthcare is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Srong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Acadia Healthcare has an earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 46 cents.
Zacks Rank: Acadia Healthcare has a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the broader medical sector that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Actavis (ACT), an earnings ESP of +4.38% and a Zacks Rank #2.
Alnylam Pharmaceuticals (ALNY), an earnings ESP of +4.55% and a Zacks Rank #2.
bluebird bio (BLUE), an earnings ESP of +9.68% and a Zacks Rank #2.
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