Amerigroup Earnings Preview

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After beating estimates last quarter by $0.02, Amerigroup (NYS: AGP) has set the standard for itself. The company will unveil its latest earnings on Friday, Feb. 17. Amerigroup focuses on serving people who receive health-care benefits through publicly sponsored programs, including Medicaid, Children's Health Insurance Program, Medicaid expansion programs, and Medicare Advantage.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Amerigroup as a buy. But with 53.3% of analysts rating it a buy, Amerigroup is still below the mean analyst rating of its nearest 10 competitors, which average 57.7% buys. Analysts like Amerigroup better than competitor WellCare Health Plans overall. Two out of 12 analysts rate WellCare Health Plans a buy compared to eight of 15 for Amerigroup. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.
  • Revenue forecasts: On average, analysts predict $1.62 billion in revenue this quarter. That would represent a rise of 8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.62 per share. Estimates range from $0.54 to $0.72.

What our community says:
CAPS All-Stars are in strong support of the stock, with 94.2% giving it an "outperform" rating. The greater community backs the All-Stars, as 90% give it a rating of "outperform." Fools have embraced Amerigroup, though the message boards have been quiet lately with only 81 posts in the past 30 days. Though still bullish, the CAPS rating of four out of five stars for Amerigroup is a bit more pessimistic than the community assessment.

Management:
Amerigroup's profit has risen year-over-year by an average of 22% over the past five quarters. Revenue has now gone up for three straight quarters.

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 company's net margin has slipped in the last two quarters year over year. Net margin reflects what percentage of revenue becomes profit. See how Amerigroup has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Net Margin

3.0%

2.9%

4.6%

5.3%

One final thing: If you want to keep tabs on Amerigroup movements, and for more analysis on the company, make sure you add it to your Watchlist.

Motley Fool newsletter services have recommended buying shares of Amerigroup. 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.

Earnings estimates provided by Zacks.

At the time this article was published

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