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Anthem Q3 Earnings: Can NYSE:ANTM Hit Its $4.18 EPS Target?

in EARNINGS/INVESTING IDEAS by

Anthem, Inc. (NYSE:ANTM) is scheduled to report Q3 earnings results on October 28, 2020.

The company is expected to report earnings of $4.18/share on revenue of $29.859 billion. The consensus earnings per share (EPS) of $4.18/share is based on a poll of 23 analysts and represents a decline in eps of −14.2% over the same quarter last year, when the company reported earnings of $4.87/share.

The revenue forecast of $29.859 billion based on a poll of 13 analysts implies a year-over-year (YoY) growth in revenue of 12.9%. Last year the company reported $26.444 billion in revenue for the quarter.

Expected to report EPS contraction of −14.2% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $29,858.75 $26,444.00 12.9%
EPS $4.18 $4.87 −14.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Anthem, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $8.58 $9.20 7.3% Beat
Q1, 2020 $6.44 $6.48 0.6% Beat
Q4, 2019 $3.89 $3.88 −0.1% Missed
Q3, 2019 $4.82 $4.87 1.1% Beat
Q2, 2019 $4.62 $4.64 0.5% Beat
Q1, 2019 $5.90 $6.03 2.3% Beat
Q4, 2018 $2.20 $2.44 10.8% Beat
Q3, 2018 $3.70 $3.81 2.9% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 4.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $265.23 $277.19 4.5% Increase
April 29, 2020 $268.22 $280.73 4.7% Increase
January 29, 2020 $290.32 $265.89 −8.4% Decline
October 23, 2019 $260.25 $259.49 −0.3% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.79, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.79 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Anthem, Inc. is currently trading at $291.19/share, down −0.3% for the day. The company is trading at approximately 94.2% of its 52-week high of $309.10/share. The company’s stock price is up 5.1% since the last earnings report and down −0.4% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 56.79 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:ANTM Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 12.38 and a forward P/E multiple of 12.86.

Anthem, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.13. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $291.19
P/E Ratio 12.4x
P/E Ratio (Fwd) 12.9x
PEG Ratio 0.3
Total Debt / Total Capital 24.3%
Levered Free Cash Flow $9.96 billion
EV / EBITDA 9.4x

Finbox

Anthem, Inc. is a large-cap stock with a market capitalization of $73.236 billion and a total enterprise value of $90.806 billion. The company operates in the Healthcare sector and the Healthcare Providers & Services industry.

Anthem, Inc., through its subsidiaries, operates as a health benefits company in the United States. It operates through three segments: Commercial & Specialty Business, Government Business, and Other. The company offers a spectrum of network-based managed care health benefit plans to large and small group, individual, Medicaid, and Medicare markets. Its managed care plans include preferred provider organizations; health maintenance organizations; point-of-service plans; traditional indemnity plans and other hybrid plans, such as consumer-driven health plans; and hospital only and limited benefit products. The company also provides a range of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs, and other administrative services. In addition, it offers an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits, radiology benefit management, and analytics-driven personal health care guidance; and Medicare administrative services. Further, the company provides services to the federal government in connection with the Federal Employee Program; and operates as a licensee of the Blue Cross and Blue Shield Association. As of December 31, 2019, it served 41 million medical members through its affiliated health plans. Anthem, Inc. has a strategic relationship with Quest Diagnostics Incorporated to develop various outcomes-based programs for enhanced health care experience for consumers and providers. The company was formerly known as WellPoint, Inc. and changed its name to Anthem, Inc. in December 2014. Anthem, Inc. was founded in 1944 and is headquartered in Indianapolis, Indiana.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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