HC2 Holdings (HCHC) Reports Q4 Loss, Tops Revenue Estimates

HC2 Holdings (HCHC) came out with a quarterly loss of $0.47 per share versus the Zacks Consensus Estimate of a loss of $0.16. That compares to a loss of $0.13 per share a year earlier. These numbers were adjusted for one-time items.

This quarterly report represents an earnings surprise of -193.75%. A quarter ago, it was expected that this diversified holding company would post a loss of $0.42 per share when it actually produced earnings of $0.05, representing a surprise of 111.90%.

Over the last four quarters, the company has topped consensus earnings per share estimates only once.

HC2 Holdings, which belongs to the Zacks Diversified Operations industry, posted revenues of $524.90 million for the quarter ended December 2018, surpassing the Zacks Consensus Estimate by 7.72%. This compares to prior year revenues of $458.50 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of current share price movements based on recently released data and future earnings expectations will depend primarily on management’s commentary following the earnings conference call.

Year to date, HC2 Holdings shares are up about 19.3%, while the S&P 500 is up 11%.

What’s next for HC2 Holdings?

While HC2 Holdings has outperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no simple answers to this key question, but one reliable indicator that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions themselves or rely on a proven rating tool like the Zacks Rank, which has an impressive history of harnessing the power of earnings estimate revisions.

Prior to the earnings release, the estimate revision trend for HC2 Holdings was mixed. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into a Zacks Rank of #3 (Hold). Therefore, the company’s stock is expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the upcoming quarters and current fiscal year change in the coming days. The current consensus EPS estimate is -$0.44 on $437.03 million in revenue for the coming quarter and -$1.16 on $1.91 billion in revenue for the current fiscal year.

Investors should be aware that industry prospects can also have a material impact on stock performance. In terms of the Zacks Industry Rank, Diversified Operations is currently in the top 17% of 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

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