Healthways Earnings Preview

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If Healthways (NAS: HWAY) misses estimates again it will be the third consecutive quarter for the company. The company will unveil its latest earnings on Monday, Oct. 24. Healthways and its wholly-owned subsidiaries provide Health and Care Support solutions to help people maintain or improve their health.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Healthways with eight of 11 analysts rating it hold. Analysts don't like Healthways as much as competitor Transcend Services overall. Five out of five analysts rate Transcend Services a buy compared to three of 11 for Healthways. Analysts still rate the stock a hold, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $174.9 million in revenue this quarter. That would represent a rise of 2.6% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.27 per share. Estimates range from $0.21 to $0.32.

What our community says:
CAPS All-Stars are solidly backing the stock with 96.6% awarding it an "outperform" rating. The community at large concurs with the All-Stars with 94.7% granting it a rating of "outperform." Fools are keen on Healthways and haven't been shy with their opinions lately, logging 134 posts in the past 30 days. Even with a robust four out of five stars, Healthways' CAPS rating falls a little short of the community's upbeat outlook.

Management:
Healthways' profit has risen year over year by an average of 4.9% over the past five quarters. Revenue has fallen in the past two quarters. The company's gross margin shrank by 4.8 percentage points in the last quarter. Revenue fell 3.4% while cost of sales rose 3.3% to $126 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

25.7%

25.2%

36.9%

29.8%

Operating Margin

7.9%

6.6%

15.0%

12.1%

Net Margin

3.4%

2.5%

8.0%

6.2%

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Motley Fool newsletter services have recommended buying shares of Healthways.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

At the time this article was published

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