Why Amerigroup's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of health-care service provider Amerigroup (NYS: AGP) had a solid day today, rising as much as 10% before closing with a 6.8% gain.

So what: The bad news for Amerigroup shareholders is that earnings per share in the first quarter fell 53% from last year. The good news is that the drop was fully expected and the $0.64 per-share profit was a good deal better than the $0.56 that Wall Street analysts had estimated. Revenue grew 15% year over year to $1.77 billion, which was slightly short of the $1.81 billion that analysts were looking for.

Now what: There wasn't much of an update on the company's full-year outlook -- revenue is still expected to climb 40%, and the net margin is still seen in the 1.5% to 2.5% range. However, the company did tighten the expected health benefit ratio for the year, bringing it down slightly to a midpoint of 86.2%.

In all, it looks like a solid quarter for Amerigroup, and the company's expansion efforts in Texas and Louisiana should help set it up to deliver on the growth promises for the full year.

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At the time thisarticle was published Motley Fool newsletter services have recommended buying shares of Amerigroup. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

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