Anthem (ANTM) Q1 Earnings: What's in Store for the Stock?

Anthem Inc. ANTM will release first-quarter 2018 results on Apr 25, before the market opens. Last quarter, the company delivered a positive earnings surprise of 3.20%.

Let’s see, how things are shaping up for this announcement.

Anthem’s revenues have been consistently growing over the past several quarters, driven membership growth. The company’s fully insured and self-funded memberships have boosted the total enrollment. The Zacks Consensus Estimate for first-quarter revenues is pegged at $22.5 billion, reflecting a year-over-year rise of nearly 1%.

The company’s Government business has been performing well over  a considerable period of time, supported by increasing Medicaid and Medicare enrollment. The consensus mark for total operating revenues of Government business is pegged at $12.8 billion, up 7% year over year.

However, higher medical costs for individual ACA-compliant products and more claims leading to an escalated benefit expense ratio from its Medicaid business are expected to drain the bottom line.

Additionally, continuing with the earlier trend, Anthem is anticipated to have witnessed higher administrative costs in the first quarter.

Anthem’s results are also likely to be affected by a persistent softness in its Individual business.

Earnings Whispers

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

Zacks ESP: Anthem has an Earnings ESP of -1.83%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. Price and EPS Surprise | Anthem, Inc. Quote

Zacks Rank: Anthem carries a Zacks Rank #2, which increases the predictive power of ESP. However, a company needs to have a positive ESP to be confident about an earnings surprise. Thus, this combination leaves surprise prediction inconclusive.

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

Stocks to Consider

Here are some companies you may wish to consider from the same space as these have the right combination of elements to beat estimates this time around:

Humana Inc. HUM is scheduled to report first-quarter earnings on May 2. The company has an Earnings ESP of +0.20% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aetna, Inc.AET has an Earnings ESP of +0.43% and a Zacks Rank #3. The company is set to report first-quarter earnings on May 1.

Wellcare Health Plans, Inc. WCG has an Earnings ESP of +3.89% and is a Zacks #2 Ranked player. The company is expected to report first-quarter earnings on May 1.

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