Company name HMS Holdings Corp
Stock ticker HMSY
Live stock price [stckqut]HMSY[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Fair
Sales growth Fair
EPS growth Fair
P/E growth Good
EBIT growth Poor

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $11.07
Target stock price (averages with growth) $17.6
Target stock price (averages with no growth) $17.81
Target stock price (manual assumptions) $23.01

The following company description is from Google Finance: http://www.google.com/finance?q=hmsy

HMS Holdings Corp. (HMS) provides cost containment services to Government and private healthcare payers and sponsors. Its services ensure that healthcare claims are paid correctly, and its coordination of benefits services ensure that they are paid by the responsible party. Together, these services help clients recover amounts from liable third parties; prevent future improper payments; reduce fraud, waste and abuse; and ensure regulatory compliance. Its clients are the Centers for Medicare & Medicaid Services (CMS); state Medicaid agencies; commercial health plans, including Medicaid managed care, Medicare Advantage, and group health lines of business; government and private employers; Pharmacy Benefit Managers (PBMs); child support agencies; the Veterans Health Administration (VHA); and other healthcare payers and sponsors. In December 2012, the Company acquired the assets and liabilities of MRM, which provides Workers’ Compensation recovery services for commercial health plans.

 

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in HMS Holdings Corp as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns. I am going to remove HMS Holdings from my Watch List.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor. You can review the best companies that I have found (and I probably invest my own money in most of these companies) in my Watch List.

How was this analysis of HMS Holdings Corp calculated?

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.
[s2If current_user_can(s2member_level1)]
In order to assist you in using the techniques of this book, the values that I used when calculating the Manual pricing above were:

Stock price at the time of the calculation: $16.31

Growth: 0.18

Current EPS (TTM): $0.45

P/E: 36

Future EPS Calc: $1.02

Future Stock Price Calc: $37.06

Target stock price: $23.01

I hope that this makes you a better investor. [/s2If]

Company name HMS Holdings Corp.
Stock ticker HMSY
Live stock price [stckqut]HMSY[/stckqut]
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Poor
Sales growth Good
EPS growth Good
P/E growth Good
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $35.98
Target stock price (averages with growth) $52.57
Target stock price (averages with no growth) $37.99
Target stock price (manual assumptions) $35.63

The following company description is from Google Finance: http://www.google.com/finance?q=hmsy

HMS Holdings Corp. (HMS) provides cost containment services to Government and private healthcare payers and sponsors. Its services ensure that healthcare claims are paid correctly, and its coordination of benefits services ensure that they are paid by the responsible party. Together, these services help clients recover amounts from liable third parties; prevent future improper payments; reduce fraud, waste and abuse; and ensure regulatory compliance. Its clients are the Centers for Medicare & Medicaid Services (CMS); state Medicaid agencies; commercial health plans, including Medicaid managed care, Medicare Advantage, and group health lines of business; government and private employers; Pharmacy Benefit Managers (PBMs); child support agencies; the Veterans Health Administration (VHA); and other healthcare payers and sponsors. In December 2012, the Company acquired the assets and liabilities of MRM, which provides Workers’ Compensation recovery services for commercial health plans.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

Many readers have reached out to me to ask about how to run a balanced portfolio. This article is designed to help you with general guidelines for developing such portfolio. A balanced portfolio should be 20-40% in index funds and 60-80% in individual stocks spread out among many industries. This allows you to have exposure to the general market, the international market, and the growth of truly well-run companies. The proportion of money between index funds and individual companies should be dictated by your age and how soon you will need the money to pay for life’s expenses.

The first thing to do is invest 20 to 40% of your portfolio in index funds. Divide these index funds into at least four categories:

  • international funds
  • bonds funds
  • small-cap or mid-cap funds
  • large-cap funds

I suggest that you balance your fund investments equally every year. This means that you would have 5% of your portfolio in each fund category. You may have to annually add money from the individual stock 80% of your portfolio to maintain at least 20% index fund exposure.

It really doesn’t matter which company manages the index fund you choose. There is some variation in international funds since they can track many different markets so you may need to study a bit for that component. There is little true variation in bonds funds so just find one that tracks the Barclays Capital Aggregate Bond Index. For the stock index funds, they should track one of the S&P indexes or one of the Russell indexes.

If you are over 65 then you may want to start dropping down to 60% of your portfolio being in individual stocks and 40% index funds. You definitely want to consider this if you are over 75 years of age. However, if you are under 65 then you probably should have a portfolio of stocks that is approximately 80% of your portfolio. At 65 you may think you need to be more cautious but there is a high probability that a 65 year-old person is going to live to be 90. If you have reached the glorious age of 75 then you are even more likely to live to 90.  With 25-45 more years of spending to do, you really need your money to continue to grow even if you are retired. As you approach 80 or 90 years, you may want to have a more even mix of stocks, bonds, and money-market cash. To understand this better, check out my whitepaper, Retire In Luxury.

Divide 80% of your portfolio into equal allotments that are larger than $5,000 per allotment. You should have at least 10 allotments in a balanced portfolio. You could have 20 or 30 allotments depending on the size of your portfolio. If you do not have $50,000 to divide 10 ways then divide your existing portfolio into $5,000 increments. You will find that you are much more efficient and profitable if you invest $5,000 or more using GOPM. If you have fewer than 10 allotments, be very diligent about getting a good mix of industries so that you are not overly hurt by any one trend.

Regardless of the number of allotments that you choose, you need to choose twice that number in stocks that you are tracking.  So if you have 10 allotments, you should track 20 stocks. This allows you to always have a stock that is rising to invest your money. Invariably, some of your tracked stocks will be going sideways or down but by tracking double the number you need, you are likely to have 10 that have upward momentum.

You should plan on investing in 10 to 30 companies at a time using the tools that I show in The Confident Investor. Grow your investment in any individual stock until you have doubled your money using GOPM (Grow on Other People’s Money).

When you have doubled your money in half of your companies, you may want to consider changing your allocation size to a larger allocation. This will allow you to continue to grow your investment in those great companies.

It is also possible to stop investing in any given company at half of an allotment or twice allotment depending on how you feel about that company. You should also factor the number of companies in the same industry you already having a portfolio. For instance, if you have 2 companies in nearly every industry except you only have one mining company, feel free to allow that mining company to grow to a double allotment. Similarly, if you have 3 software companies in your portfolio then you may want to limit one or all of them to a half allotment so that your portfolio is not overweight in that category.

Let me show you an example of a 50-year-old man (we will call him Bob) that has been able to save $150,000 in his IRA account.

  • $7,500 in an international index fund
  • $7,500 in a bond fund
  • $7,500 in a small-cap  or a mid-cap fund
  • $7,500 in a large-cap fund
  • $120,000 divided into 10 allotments of $12,000 each.  This means that Bob will purchase up to $12,000 in any stock on the 20 possibilities.

For the 20 stocks, Bob chose the following from the Confident Investor Watch List:

Apple Inc. Technology – Personal
Akamai Technologies Technology – Internet
Ansys, Inc. Technology – Enterprise Software
Atlas Pipeline Energy
Caterpillar, Inc. Manufacturing – Machinery
Chipotle Mexican Retail – Restaurant
Cirrus Logic Technology – Semiconductor
Deckers Outdoor Footwear
Ebay Inc. Retail – Web
Extra Space Storage Real Estate
Goldcorp Inc. Mining – Gold
Google Inc. Advertising – Web
Hms Holdings Corp Healthcare – Services
Helmerich & Payne Energy
Merck & Co., Inc. Pharmaceutical
Net Servicos de Comunicacao Telecommunications – International
Priceline.com Inc. Retail – Web
Boston Beer Alcohol Beverages
Washington Banking Finance
Yum! Brands, Inc. Retail – Restaurant

Bob will invest in these companies as indicated by the technical indicators described in my book, The Confident Investor.  You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in ebook formats for Nook, Kindle, and iPad.

Company name HMS Holdings Corp.
Stock ticker HMSY
Live stock price [stckqut]HMSY[/stckqut]
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Poor
Sales growth Good
EPS growth Good
P/E growth Good
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $42.97
Target stock price (averages with growth) $56.38
Target stock price (averages with no growth) $36.22
Target stock price (manual assumptions) $42.58

The following company description is from Google Finance: http://www.google.com/finance?q=hmsy

HMS Holdings Corp. (HMS) provides cost containment services to Government and private healthcare payers and sponsors. The Company’s services ensure that healthcare claims are paid correctly, through its program integrity services, and by the responsible party, through its coordination of benefits services. Its clients are state Medicaid agencies, the Centers for Medicare & Medicaid Services (CMS), Medicaid and Medicare managed care plans, Government and private employers, Pharmacy Benefit Managers, or PBMs, child support agencies, the Veterans Health Administration (VHA), commercial plans, and other healthcare payers. As of December 31, 2011, HMS served 43 state Medicaid agencies and the District of Columbia, and 137 Medicaid managed care plans under 66 contracts. In December 2011, the Company acquired HDI Holdings, Inc. and its operating subsidiary, HealthDataInsights, Inc. (HDI).

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

 

Company name HMS Holdings Corp.
Stock ticker HMSY
Live stock price [stckqut]HMSY[/stckqut]
P/E compared to competitors Fair
MANAGEMENT EXECUTION
Employee productivity Poor
Sales growth Good
EPS growth Good
P/E growth Good
EBIT growth Good
ANALYSIS
Confident Investor Rating Good
Target stock price (TWCA growth scenario) $41.35
Target stock price (averages with growth) $54.06
Target stock price (averages with no growth) $34.52
Target stock price (manual assumptions) $44.47

The following company description is from Google Finance: http://www.google.com/finance?q=hmsy

HMS Holdings Corp. (HMS) provides a variety of cost containment, coordination of benefits and program integrity services for government and private healthcare payors and sponsors. The Company’s clients are state Medicaid agencies, government-sponsored managed care plans, Pharmacy Benefit Managers (PBMs), child support agencies, the Veterans Health Administration (VHA), the Centers for Medicare & Medicaid Services (CMS), commercial plans, self-funded employer plans and other healthcare payors. In September 2010, the Company acquired Chapman Kelly, Inc. In June 2010, it acquired privately-held Allied Management Group, Special Investigation Unit (AMG-SIU). Coordination of benefits services route claims already paid by a government program to the liable third party, which then reimburses the government payer.

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.