HealthEquity’s (HQY) third-quarter earnings and revenue beat estimates

HealthEquity (HQY) reported quarterly earnings of $0.38 per share, beating the Zacks Consensus Estimate of $0.35 per share. For comparison, a year earlier earnings per share were $0.35. These numbers have been adjusted for one-off items.

This quarterly report presented an earnings surprise of 8.57%. A quarter ago, it was expected that this healthcare account management services provider would post earnings of $0.34 per share when it actually produced earnings of $0.33, delivering a surprise of -2.94%.

Over the last four quarters, the company has surpassed consensus EPS estimates only once.

HealthEquity, which belongs to the Zacks Medical Services industry, posted revenues of $216.09 million for the quarter ended October 2022, surpassing the Zacks Consensus Estimate by 4.60%. For comparison, revenues from the previous year amounted to $179.95 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.

HealthEquity shares are up about 53.1% year to date compared with the S&P 500’s decline of -16.1%.

What’s next for HealthEquity?

While HealthEquity 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 measure 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 by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of earnings release, estimate revision trend for HealthEquity: Favorable. 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 #2 (Buy) for the stock. We can therefore expect that the company’s shares will outperform 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 next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is $0.32 on revenue of $219.86 million for the coming quarter and $1.28 on revenue of $849.3 million for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Healthcare Services is currently in the bottom 48% of over 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.

Another company in the same industry, UpHealth, Inc. (UPH), has not yet released results for the quarter ending September 2022.

The company is expected to report quarterly loss of $0.08 per share in its upcoming report, representing a year-over-year change of -60%. The consensus EPS estimate for the quarter has not changed over the last 30 days.

UpHealth, Inc. revenues are expected to be will amount to USD 47.15 million, which means a decrease of 3.9% compared to the same quarter last year.

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