2015-02-03 Pre-Earnings Analysis (HUM) (WHR)

Posted on February 3rd, by Mitchell Warren in Free Articles, Options Risk Management, Trade Ideas. Comments Off on 2015-02-03 Pre-Earnings Analysis (HUM) (WHR)

 Pre-Earnings Analysis

  1. HUM- Humana will release Q4 earnings before the bell tomorrow morning. Analysts are looking for $1.16 per share in earnings on revenue of $12.4B. On January 12th, the company backed their $8.50-$9.00 per share earnings guidance and raised their net membership gains in 2015 for individual Medicare Advantage Plans to 300K-350K from 235K-255K (continues to benefit from an aging demographic). The stock trades at a P/E ratio of 16.54x (2015 estimates) with 16.9% EPS growth, price to sales ratio of 0.48x, and a price to book ratio of 2.21x. Double digit sales growth is likely to continue this year as analysts see full year revenue above $54B (11.5% year over year growth). Recently on January 6th and 8th, both Argus and Barclays raised their price targets to $155 from $135 and $141, respectively.


  1. WHR- Whirlpool will also be releasing Q4 earnings before the bell tomorrow morning. Analysts are looking for $3.19 per share in earnings on revenue of $5.8B. The $15B home appliance maker is likely to see an incremental boost in sales when they report the biggest quarter of the year for the company on lower energy prices. Even though they’ve missed EPS estimates for four straight quarters (still double digit growth) the stock has moved higher after the results for six consecutive quarters (closing higher on five of those occasions). Whirlpool sees the current $1B annual market in Asia turning into a $2.5B+ opportunity by 2018 from growth in the Chinese and Indian markets. Europe, Middle East, and Africa is another major focus going forward as they look to expand their global reach. The stock trades at a P/E ratio of 13.95x (2015 estimates) with 29.5% EPS growth, P/S ratio of 0.83x, and a P/B ratio of 3.02x. Analysts are looking for revenue growth to accelerate to 18.7% (from 4.1%) this year to $23B+. While Wall Street (average analyst price target of $203) seems to think the company is fairly valued, I can see this stock hitting $220 later this year (15x earnings multiple; similar to BAC’s and MKM Partners price targets).


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