Amerigroup Earnings Preview

Amerigroup (NYSE: AGP  ) didn't hit the Street's expectations last quarter, but investors hope that it will rebound this quarter. The company will unveil its latest earnings on Friday, Oct. 28. Amerigroup focuses on serving people who receive health-care benefits through publicly sponsored programs, including Medicaid, Children's Health Insurance Program, Medicaid expansion programs, and Medicare Advantage.

What analysts say:

• Buy, sell, or hold?: Half of analysts think investors should stand pat on Amerigroup. Analysts like Amerigroup better than competitor WellCare Health Plans overall. Two out of 11 analysts rate WellCare Health Plans a buy compared to six out of 14 for Amerigroup. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.
• Revenue forecasts: On average, analysts predict $1.57 billion in revenue this quarter. That would represent a rise of 5.4% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.69 per share. Estimates range from $0.60 cents to $0.79.

What our community says:
CAPS All-Stars are solidly behind the stock, with 92.1% giving it an outperform rating. The community at large concurs with the All-Stars, with 90.1% assigning it a rating of outperform. Fools are keen on Amerigroup, though the message boards have been quiet lately, with only 81 posts in the past 30 days. Even with a robust four out of five stars, Amerigroup's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Amerigroup's profit has risen year over year by an average of more than twofold over the past five quarters. Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows net margins over the past four quarters.

Quarter	Q2	Q1	Q4	Q3
Net Margin	2.9%	4.6%	5.3%	5.6%

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