Change Healthcare Q2 Earnings: Buying Soaring NasdaqGS:CHNG Stock Before Call?

in EARNINGS/INVESTING IDEAS by

Change Healthcare Inc. (NasdaqGS:CHNG) is scheduled to report Q2 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $0.25/share on revenue of $745 million. The consensus earnings per share (EPS) of $0.25/share is based on a poll of 17 analysts and represents a decline in eps of −5.7% over the same quarter last year, when the company reported earnings of $0.27/share.

The revenue forecast of $745 million based on a poll of 15 analysts implies a year-over-year (YoY) decline in revenue of −6.4%. Last year the company reported $795.8 million in revenue for the quarter.

Expected to report EPS contraction of −5.7% for Q2, 2021
Metric Expected Prior Year YoY Change
Revenue $745.02 $795.81 −6.4%
EPS $0.25 $0.27 −5.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 5 tracked quarters, and met expectations 1 quarter.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2021 $0.15 $0.25 70.0% Beat
Q4, 2020 $0.37 $0.42 14.8% Beat
Q3, 2020 $0.31 $0.33 7.4% Beat
Q2, 2020 $0.27 $0.27 0% Met
Q1, 2020 $0.37 $0.56 53.3% 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 7.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $12.14 $13.08 7.7% Increase
June 3, 2020 $12.53 $11.88 −5.2% Decline
February 12, 2020 $15.63 $16.03 2.6% Increase
November 13, 2019 $13.17 $13.90 5.5% Increase

Fundamentals And Technical Analysis

Change Healthcare Inc. is currently trading at $14.18/share, down −3.9% for the day. The company is trading at approximately 80.4% of its 52-week high of $17.57/share. The company’s stock price is up 8.4% since the last earnings report and down −3.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 49.04 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:CHNG Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −4.45 and a forward P/E multiple of 11.86.

Change Healthcare Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.33. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2021.Q1
Period End Date June 30, 2020
Stock Price (Current) $14.18
P/E Ratio −4.4x
P/E Ratio (Fwd) 11.9x
PEG Ratio 0.0
Total Debt / Total Capital 53.8%
Levered Free Cash Flow -$64.6 million
Price To Sales 4.8x

Finbox

Change Healthcare Inc. is a mid-cap stock with a market capitalization of $4.488 billion and a total enterprise value of $9.54 billion. The company operates in the Healthcare sector and the Health Care Technology industry.

Change Healthcare Inc., an independent healthcare technology platform, provides data and analytics-driven solutions to enhance clinical, financial, administrative, and patient engagement outcomes in the United States healthcare system. It operates through three segments: Software and Analytics, Network Solutions, and Technology-Enabled Services. The Software and Analytics segment offers software and analytics solutions for financial performance, payment accuracy, clinical decision management, value-based payment, provider and consumer engagement, and imaging and clinical workflow. The Network Solutions segment enables financial, administrative, and clinical transactions; electronic business-to-business and consumer-to-business payments; and aggregation and analytics of clinical and financial data. The Technology-Enabled Services segment provides solutions for financial and administrative management, value-based care, communication and payment, pharmacy benefits administration, and healthcare consulting. The company was founded in 2016 and is headquartered in Nashville, Tennessee.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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