The 10-second takeaway
For the quarter ended June 30 (Q2), HMS Holdings beat slightly on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share contracted. GAAP earnings per share shrank significantly.
Margins dropped across the board.
HMS Holdings recorded revenue of $125.8 million. The nine analysts polled by S&P Capital IQ looked for a top line of $123.7 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.20. The 10 earnings estimates compiled by S&P Capital IQ forecast $0.21 per share. Non-GAAP EPS of $0.20 for Q2 were 13% lower than the prior-year quarter's $0.23 per share. GAAP EPS of $0.12 for Q2 were 20% lower than the prior-year quarter's $0.15 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 36.5%, 400 basis points worse than the prior-year quarter. Operating margin was 16.2%, 510 basis points worse than the prior-year quarter. Net margin was 8.3%, 250 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $127.2 million. On the bottom line, the average EPS estimate is $0.23.
Next year's average estimate for revenue is $504.9 million. The average EPS estimate is $0.88.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 281 members out of 296 rating the stock outperform, and 15 members rating it underperform. Among 64 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 60 give HMS Holdings a green thumbs-up, and four give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on HMS Holdings is outperform, with an average price target of $28.67.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.