Universal Health Services-B (NYSE:UHS) Shows Strong Earnings Momentum and Bullish Technical Setup

For investors looking for a systematic way to find possible market leaders, a blended tactic that looks at fundamental earnings momentum and technical chart formations can be a useful instrument. This process filters for firms showing solid near-term earnings speed and rising analyst changes, signs of strong growth momentum, while also displaying healthy price movements and orderly consolidation formations that hint at a possible price advance. This two-part method tries to locate stocks where strong fundamental drivers may be matching with positive technical circumstances.

UNIVERSAL HEALTH SERVICES-B (NYSE:UHS) appears as a candidate fitting these joined standards, offering a situation for both growth and momentum investors to review more carefully.

Fundamental Growth Momentum

The center of a high growth momentum tactic rests on finding companies with speeding up business results. Universal Health Services displays a number of positive indicators in this area, as seen in its ChartMill High Growth Momentum Rating of 6. The rating combines main growth and momentum measures, and UHS's result is backed by solid basic numbers.

• Earnings Strength and Speed: The company's trailing twelve-month (TTM) EPS is $20.8, showing a large 40% increase from the earlier TTM period. More critical for momentum, the latest quarterly EPS increased by more than 53% compared to the year before. This comes after a sequence of solid quarterly increases, with the three previous quarters showing gains of 24%, 31%, and 57%, in that order.
• Steady Performance: A key element for momentum investors is a firm's capacity to regularly outperform market forecasts. UHS has surpassed EPS estimates in all of the past four quarters, with a typical beat of 12.7%. This history of beating estimates creates trust and can result in favorable analyst changes.
• Profitability Growth: Beyond revenue growth, widening margins signal operational effectiveness and pricing strength. UHS has shown this, with its quarterly profit margin rising to 8.3% in the last reported quarter, up from 7.7% two quarters earlier. On a yearly basis, the profit margin grew noticeably from 5.02% to 7.22% in the last fiscal year.
• Analyst Belief: The momentum is further supported by analyst activity. Over the previous three months, the average forecast for UHS's next-year EPS has been increased by 5.6%, hinting at rising positive outlook about the firm's nearer-term earnings possibility.

Technical Health and Formation Quality

While solid fundamentals give the "reason," technical study assists with the "timing." According to the detailed ChartMill Technical Report, UHS presently has a Technical Rating of 7 and a more notable Setup Rating of 8. This pairing signals a stock in a healthy upward trend that is now pausing in a possibly orderly formation.

• Set Upward Trend: The technical report mentions a positive longer-term trend, with the stock price trading above important rising moving averages (SMA50, SMA100, SMA200). Its relative health is a prominent trait, doing better than 84% of all stocks over the past year. This puts UHS in a leading spot inside the wider market.
• Pause for Possible Advance: The high Setup Rating of 8 is especially significant for traders. This result implies the stock has been trading in a set range lately, letting movement calm and forming a clearer support level. The report points out a main support area between $218.21 and $222.59, made by a meeting of trendlines and moving averages. Holding above this area, followed by a move above the recent pause high, could indicate the next upward step.
• Market Setting: The present technical view shows UHS resting after a solid rise, its 6-month gain of more than 30% confirms this. The nearer-term trend is mentioned as negative as it withdraws from recent highs, which is a common and expected action inside a longer-term upward trend. This withdrawal is what forms the current formation chance, giving a possible entry point nearer to support for those who did not catch the first move.

A Merging Chance

Universal Health Services offers a situation where fundamental momentum and technical position seem to be aligned. The company is producing speeding up earnings, surpassing estimates, and receiving positive analyst outlook, all material for a high-momentum stock. Technically, the shares are in a long-term upward trend and are now absorbing gains in a consolidation formation that has received a high quality setup score.

This merging is exactly what the blended filtering approach aims to discover: companies with the fundamental engine to push prices higher, presently pausing in a technical formation that offers a set risk level. For investors using tactics like CANSLIM or those concentrated on breakout formations, UHS illustrates the kind of candidate that justifies additional investigation.

Interested in finding more stocks that match this high-growth momentum with breakout formation profile? You can execute the filter yourself using this High Growth Momentum Breakout Setups Screen.

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Disclaimer: This article is for informational purposes only and does not form investment guidance, a suggestion, or an offer to buy or sell any security. The study is based on supplied data and should not be the only foundation for an investment choice. All investing carries risk, including the possible loss of principal. Always do your own research and think about your financial position and risk tolerance before making any investment.