DaVita Healthcare Partners Inc. DVA is set to report second-quarter 2015 earnings on Aug 4, 2015. Last quarter, it posted a 1.18% positive earnings surprise. Let's see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
In the quarter under review, this leading kidney and health care services provider enhanced its operational strength, which should boost its results. The company also expanded its clinical trial capabilities in Europe in May 2015 that helped it address late phase clinical trials outside the U.S. Such geographical expansions are beneficial for generating more revenues, thereby boosting bottom line.
However, high financial leverage, increased expenses and adverse effects of the health care reform raise caution.
Earnings Whispers
Our proven model does not conclusively show that DaVita is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: DaVita has an ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 94 cents per share.
Zacks Rank: DaVita holds a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, when combined with a 0.00% ESP, the surprise prediction becomes difficult.
We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks in the health care space which you may want to consider, as our model shows that, they have the right combination of elements to post an earnings beat this quarter:
HCA Holdings, Inc. HCA has an Earnings ESP of +2.24% and a Zacks Rank #2.
Myriad Genetics Inc. MYGN has an Earnings ESP of +2.44% and a Zacks Rank #3 (Hold).
Halyard Health, Inc. HYH has an Earnings ESP of +3.70% and a Zacks Rank #3.
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