HMS Holdings Increases Sales but Misses Revenue Estimate

Seth Jayson, The Motley Fool
Updated

HMS Holdings (NAS: HMSY) reported earnings on April 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), HMS Holdings missed estimates on revenues and earnings per share.

Compared with the prior-year quarter, revenue improved significantly and GAAP earnings per share dropped significantly.


Margins dropped across the board.

Revenue details
HMS Holdings reported revenue of $107.3 million. The seven analysts polled by S&P Capital IQ looked for sales of $114.2 million on the same basis. GAAP reported sales were 30% higher than the prior-year quarter's $82.5 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.08. The four earnings estimates compiled by S&P Capital IQ predicted $0.13 per share. GAAP EPS of $0.08 for Q1 were 27% lower than the prior-year quarter's $0.11 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 41.2%, 320 basis points worse than the prior-year quarter. Operating margin was 14.9%, 460 basis points worse than the prior-year quarter. Net margin was 6.6%, 530 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $125.4 million. On the bottom line, the average EPS estimate is $0.16.

Next year's average estimate for revenue is $519.9 million. The average EPS estimate is $0.78.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 279 members out of 296 rating the stock outperform, and 17 members rating it underperform. Among 65 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 62 give HMS Holdings a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on HMS Holdings is outperform, with an average price target of $34.50.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings. He is the co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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. The Motley Fool has a disclosure policy.

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