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Universal Health (UHS) Q1 Earnings: What’s in the Cards?


Universal Health Services, Inc. UHS is set to report first-quarter 2017 results on Apr 25, after the market closes. Last quarter, the company posted a positive earnings surprise of 0.56%. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Revenue per adjusted patient day for the Behavioral Health division is expected to have grown, continuing the trend displayed previously.

The company’s Acute Care division is also likely to deliver solid performance on the back of increasing adjusted admissions.

Capital expenditure of $520 million during 2016 is likely to show positive results, boosting the top line.

The company’s commitment to enhance shareholders’ value through share repurchases is likely to have positively impacted the bottom line by limiting share count.

Acquisition of Cambian Group at year-end 2016 is expected to have added to revenues.

However, increasing costs related to extinguishment of debt, reserves for settlements, legal judgments and lawsuits, and impairments of long-lived assets are likely to have limited bottom-line growth.

Earnings Whispers

Our proven model does not conclusively show that Universal Health is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Universal Health has an Earnings ESP of -0.49%. This is because the Most Accurate estimate is pegged at $2.05 and the Zacks Consensus Estimate stands at $2.06. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Universal Health carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive Earnings ESP to be confident about an earnings beat.

Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some other companies from the medical sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Amgen, Inc. AMGN, which is set to report first-quarter earnings on Apr 26, has an Earnings ESP of +1.99% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Anthem, Inc.ANTM has an Earnings ESP of +7.79% and a Zacks Rank #2. The company is set to report first-quarter earnings on Apr 26.

Humana, Inc. HUM has an Earnings ESP of +2.06% and a Zacks Rank #2. The company is set to report first-quarter earnings on May 3.

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