Filed Under: ,
Tickers in this Article: ESRX
Express Scripts (Nasdaq:ESRX) is expected to report increased earnings when it releases its third quarter results on Monday, November 5, 2012. The consensus estimate is anticipating a profit of 99 cents a share, an increase from last year's 79 cents per share.

Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: 5 Tricks Companies Use During Earnings Season

What to Expect: The consensus estimate for Express Scripts' earnings is 99 cents per share, up 25.3% from a year ago when the company reported earnings of 79 cents per share.

Despite rising from 91 cents over the past three months, the consensus estimate hasn't changed in the last 30 days. For the fiscal year, analysts are projecting earnings of $3.70 per share.

Revenue is expected to exceed last year's figure of $11.57 billion by 137.5% and come in at $27.48 billion for the quarter. For the fiscal year, expected revenue is $95.15 billion.

Company Performance: Revenue has been rising in the past three quarters. It hit $27.69 billion in second quarter, a more than twofold increase. Previously, revenue went up 9.4% in the first quarter and 7.1% in the fourth quarter of the last fiscal year.

ESRX's P/E ratio of 30.8 is above the industry average of 22.51. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Can Investors Trust the P/E Ratio?

The stock price has risen from $56.17 on August 2, 2012 to $62.24 over the past quarter. Express Scripts' best recent streak was when its price gained $2.82 per share between September 28, 2012 and October 4, 2012.

The Competition: Express Scripts is a pharmacy benefit management (PBM) company, providing services like retail network pharmacy management and patient care contact centers to its clients in North America. Eighteen of 20 analysts give Express Scripts a buy rating. This marks a small improvement, as the number of buy ratings has risen slightly over the past three months.

The company's closest competitor in the healthcare facilities industry is AMERIGROUP (AGP). Analysts are more optimistic about Express Scripts than about AMERIGROUP. Only zero out of 12 analysts rate the latter a buy.

comments powered by Disqus

Trading Center