Amerigroup Corp (AGP) continues to look strong on the chart, recently hitting a new all-time high after reporting an impressive 63% earnings surprise in late April. Estimates have since jumped higher, providing more support for this Zacks #1 rank stock.
Company Description
Amerigroup Corp operates as a managed care service provider for Medicare and Medicaid beneficiaries. The company was founded in 1994 and has a market cap of $3.42 billion.
Amerigroup has been steadily grinding higher for most of the last year, but shares got an extra boost into an all-time high in late April after reporting strong Q1 results that came in ahead of expectations.
First-Quarter Results
Revenue for the period was up 12% from last year to $1.54 billion. Earnings also looked great, coming in at $1.37, 63% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 81% over the last four quarters.
Amerigroup saw a respectable up tick in its membership base, increasing 1.9% from last year to approximately 2 million. It also saw its health benefits costs fall from 83.5% to 81.8% of revenue.
The company was also busy returning value to its shareholders, repurchasing 440,000 shares of common stock for $25 million.
Financial Profile
Amerigroup has used its strong earnings momentum to strengthen its balance sheet, with cash and short-term investments up $272 million from last year to $909 million against just $313 in total debt.
Estimates
We saw some pretty bullish revisions in estimates off the good quarter, with the current year jumping 10% to $4.42.
Valuation
But in light of recent gains, AGP’s forward P/E of 15.5X is a premium to its peer average of 12.5X.
6-Month Chart
On the chart, AGP continues to linger in elevated territory after recently hitting a new all-time high. Look for support from the trend line on any weakness. Take a look below.
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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