Health insurer Aetna Inc. AET is scheduled to report first-quarter 2015 results before the opening bell on Apr 28.
In the last quarter, this company reported in line with the Zacks Consensus Estimate. The average beat for the trailing four quarters is 11.3%.
Will Aetna deliver a positive earnings surprise this quarter as well? Let's see what factors might have influenced the earnings report this time around.
Points to Consider Ahead of Q1 Announcement
Aetna’s earnings for the quarter will not be driven by any particular factor but by a host of growth measures undertaken over the past several months. These drivers include strong organic membership growth in public and private exchanges, Medicare Advantage, dual-eligible contracts, Medicaid expansion and synergies from the Coventry acquisition.
Earnings will somehow reflect a decline in the company’s commercial administrative service contract membership. Commercial Group margin will also see a drag from a galloping cost trend and irrational pricing.
The company’s disciplined capital management featuring active share repurchases should lift its bottom line.
Earnings Whispers
Our proven model does not conclusively show that Aetna is likely to beat the Zacks Consensus Estimate in the first quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.
Zacks ESP: Aetna’s Most Accurate estimate is pegged at $1.93 per share, which is lower than the Zacks Consensus Estimate of $1.96. The Earnings ESP is thus -1.53%.
Zacks Rank: Aetna has a Zacks Rank #2. Though this increases the predictive power of ESP, the company’s ESP of -1.53% makes surprise prediction difficult.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Centene Corp. CNC with Earnings ESP of +2.08% and a Zacks Rank #2.
Humana Inc. HUM with Earnings ESP of +0.39% and a Zacks Rank #2.
Assurant Inc. AIZ with Earnings ESP of +2.7% and Zacks Rank #3.
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