Molina Healthcare, Inc.
MOH
remains well-poised for growth, courtesy of solid premium revenues, numerous acquisitions, upbeat financial guidance for 2022, tactical cost-curbing initiatives and adequate cash-generating abilities.
Zacks Rank & Price Performance
Molina Healthcare carries a Zacks Rank #2 (Buy) currently.
The stock has gained 10% over a year compared with the
industry
’s rally of 22.1%. Meanwhile, the Zacks
Medical
sector and the S&P 500 index declined 18.6% and 12.8%, respectively.
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Favorable Style Score
Molina Healthcare carries an impressive
Value Score
of A. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, when combined with a solid Zacks Rank, are the best investment bets.
Robust Growth Prospects
The Zacks Consensus Estimate for MOH’s 2022 earnings is pegged at $17.18, indicating an increase of 26.9% on 9.1% higher revenues of $30.3 billion. The consensus mark for 2023 earnings stands at $19.36, suggesting growth of 12.7% on 4.1% higher revenues of $31.5 billion.
The expected long-term earnings growth rate is pegged at 16.4%, better than the industry’s average of 14.5%.
Sound Earnings Surprise History
Molina Healthcare boasts of a strong earnings surprise record. It has surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 1.51%.
Valuation
Price-to-earnings (P/E) is one of the multiples used for valuing healthcare stocks. Compared with the health maintenance organization industry’s trailing 12-month P/E ratio of 19.5, Molina Healthcare has a reading of 15.5. It is quite evident that the stock is currently undervalued.
Solid Return on Equity
The ROE of Molina Healthcare stands at 31.9% in the trailing 12 months, which remains higher than the industry average of 22%. This reflects MOH’s efficiency in utilizing its shareholders’ funds.
Solid 2022 Outlook
Molina Healthcare anticipates revenues at around $29.5 billion, which indicates an improvement of roughly 6% from the 2021 reported figure. Meanwhile, premium revenues are projected to be around $29.25 billion, which suggests an 8.9% growth from the 2021 reported figure.
MOH estimates adjusted earnings per share to be greater than $17.10 this year, which implies a minimum rise of 26.3% from the reported figure of 2021.
Business Tailwinds
Revenues of Molina Healthcare continue to benefit from higher premium revenues stemming from membership growth in its well-performing Medicare and Medicaid businesses. These businesses enable MOH to devise cost-effective health plans and foray deeper into several U.S. communities. An aging U.S. population is likely to sustain solid demand for Molina Healthcare’s Medicare plans.
The top line of Molina Healthcare gains on continuous acquisitions pursued by the managed healthcare services provider. These buyouts have bolstered its capabilities, diversified income streams and extended its nationwide presence. Some of the notable acquisitions undertaken by MOH in the past include
Cigna Corporation
’s
CI
Texas Medicaid and Medicare-Medicaid Plan (MMP) contracts, Affinity Health Plan, YourCare Health Plan, Magellan Complete Care and Passport Health Plan.
Prudent expense management programs of Molina Healthcare are anticipated to bring down the total expenses and subsequently result in improving the general and administrative expense ratio in the days ahead.
MOH boasts of a solid cash position through which it can effectively service its debt obligations. Strong cash-generating abilities enable the healthcare provider to pursue significant business investments.
Other Stocks to Consider
Some other top-ranked stocks in the Medical space include
Assertio Holdings, Inc.
ASRT
and
Sensus Healthcare, Inc.
SRTS
, each sporting a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Assertio has a trailing four-quarter earnings surprise of 26.39%, on average. The Zacks Consensus Estimate for ASRT’s 2022 earnings is pegged at 40 cents per share, which compares favorably with the prior-year’s loss of 3 cents. The same for revenues implies 17.9% year-over-year growth. Assertio’s consensus mark for 2022 earnings has moved north by 14.3% in the past 60 days.
The bottom line of Sensus Healthcare outpaced estimates in each of the trailing four quarters, the average surprise being 155.48%. The Zacks Consensus Estimate for SRTS’s 2022 earnings suggests an increase of nearly six-fold year over year, while the same for revenues implies growth of 55.3%. Sensus Healthcare’s consensus mark for 2022 earnings has moved north by 115.5% in the past 60 days.
Shares of Assertio and Sensus Healthcare have gained 115.7% and 98.9%, respectively, in a year.
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