On Tuesday, October 27, Express Scripts (NASDAQ:ESRX) will announce its third-quarter results after the market closes. While shares have pulled back about 7% since it last reported results, the healthcare management and administration service company's stock still trades at a respectable premium of 28 times earnings.

Going into the report, therefore, investors are likely expecting the healthcare company to continue to deliver robust per-share growth in order to live up to its valuation.

Image source: Express Scripts.

Going into Q3, Express Scripts provided an optimistic outlook for the quarter. Management guided for adjusted earnings per share in the range of $1.41 to $1.45, representing 9% to 12% growth from the year-ago quarter.

For Express Scripts to maintain its current level of year-over-year revenue growth of slightly more than 1%, the company will need to post quarterly revenue of approximately $26.1 billion.

The consensus analyst estimate for revenue and adjusted EPS is for $26.4 billion and $1.44, respectively.

Looking back
Shares rose by about 1% in the trading day after Express Scripts' solid second-quarter results were announced. While revenue was below analyst expectations, reported EPS handily beat both management's guidance and the consensus analyst estimate. The company's repurchase program, along with its accelerated share repurchase, or ASR, execution helped Express Scripts drive outsized EPS growth, increasing adjusted EPS by 17% year over year on just 1% revenue growth during the same period.

Express Scripts' scale and pricing power continue to shine through in the its gross profit margin. The company reported a gross profit margin of 8.4% in Q2 2015, up 40 basis points from 8% in the year-ago quarter.

Management was "pleased" with the results, citing "focused scale and [customer] alignment" as key drivers for the outperformance.

Looking ahead
When Express Scripts reports third-quarter results, investors should check in on its guidance for the remainder of the year. When the company reported Q2 results, management chose to boost its outlook for the remainder of the year, increasing its forecast for a range of adjusted 2015 EPS of $5.37 to $5.47 to a range of $5.46 to $5.54.

When Express Scripts provides guidance during the third quarter, it's likely management will narrow its range for full-year EPS as it closes in on the end of the year. This is exactly what the company did when it reported third-quarter results last year. If management's expectations are conservative as they should be, look for the company to narrow its guidance for the full year toward the high end of its current guidance range, perhaps providing an outlook for full-year EPS of about $5.49 to $5.54.

Investors should also check in on the company's gross profit margin, as it helps provide insight into how well Express Scripts is flexing its key competitive advantages: scale and pricing power. Look for it to report a gross profit margin close to its margin of 8.4% margin reported during Q2, this would represent approximately an increase of 40 basis points from its gross profit margin in the year-ago quarter.

A copy of Express Scripts' third-quarter earnings release will be available on the company's investor information page after market close on Tuesday. On this same page, investors can also find a link to its live quarterly conference call, which will take place the following day at 8:30 a.m. ET.

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