Managed health-care company and Motley Fool Stock Advisor pick Coventry Health Care (NYSE:CVH) will report Q4 2006 financial results on Friday, Feb. 9, before the market opens. Is it still the picture of health?

What analysts say:

  • Buy, sell, or waffle? Some 18 analysts are routinely giving Coventry a checkup. Eleven of them say hold, six say buy, and only one Dr. Death says sell.
  • Revenues. On average, revenues are expected to jump 13% to $1.94 billion, which is right in the middle of the range that Coventry forecast in its third-quarter earnings release.
  • Earnings. Profits are expected to jump 20% for the quarter to $0.97 per share, which would be the upper end of management's forecast.

What management says:
Coventry Health is the low-cost provider of managed health care concentrating primarily on the commercial side of business in the small- to medium-size group market. It just so happens that this segment is also the fastest-growing segment, which hasn't hurt Coventry. Speaking at a JPMorgan Investor Day conference, management reiterated that being the low-cost provider in this segment has helped Coventry deliver "consistent, stable, and reliable results" over the years and was going to allow it to reaffirm its guidance for the quarter and the year.

What management does:
After a string of successful quarters leading up to the end of the fiscal year last year when Coventry had produced ever-growing percentages of margins across the board, 2006 saw the reverse, with slowly declining margins across the board. While it still maintains a lead on most of its competitors in each of those areas, it has been hit by anemic membership growth over the past year but did see improvements in its Medicaid and Medicare loss ratios from a year ago.

Margin

09/05

12/05

03/06

06/06

09/06

Gross

28.7%

31.2%

30.8%

30.2%

29.7%

Operating

11.6%

12.0%

11.6%

11.2%

11.1%

Net

7.4%

7.6%

7.3%

7.1%

7.1%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
This is a company that is still very healthy despite some symptoms of a cold setting in, but it seems to be going around with many health insurers these days. UnitedHealth (NYSE:UNH) just lowered guidance for the year, and WellPoint (NYSE:WLP) reported a rise in its own loss ratios last month. Though still well below its 52-week highs, Coventry has recovered from the lows that it set at the end of last year. With management confirming earnings guidance of $3.82 to $3.95 per share for 2007, it still represents a good value at these levels.

Competitors:

  • Aetna (NYSE:AET)
  • Humana (NYSE:HUM)
  • Amerigroup (NYSE:AGP)
  • Cigna (NYSE:CI)

Related Foolishness:

Coventry Health Care has earned a four-star rating from Motley Fool CAPS, the new investor intelligence community. You can add your voice to the new stock-rating service by joining today. It's free!

Coventry, UnitedHealth and Amerigroup are both recommendations of Motley Fool Stock Advisor. UnitedHealth is also a recommendation of Motley Fool Inside Value. A 30-day guess pass to any of our newsletters gives you the chance to perform a checkup on all of our market-beating recommendations, no matter what your investing style.

Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.