Why HealthEquity Inc (NASDAQ: HQY) Stock is a Buy

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Founded in 2002, HealthEquity Inc (NASDAQ:HQY) is one of the nation's largest dedicated health savings custodians. The company's innovative technology platform and tax-advantaged accounts help members build health savings while controlling health care costs. HealthEquity is the custodian of $7.1 billion in assets for more than 3.7 million health savings accounts (HSA) for 124 health plan partners and 40,000 employees across the United States.

HealthEquity (NASDAQ:HQY) reported its fiscal third-quarter results on Tuesday, Dec. 4 of $0.22 per share on revenue of $70.5 million. The consensus earnings estimate was $0.20 per share on revenue of $69.8 million. Revenue grew 24.1% on a year-over-year basis. The 24% revenue growth was driven by a 9% uptick in service revenue, 43% jump in custodial revenue, and 18% growth in interchange revenue. The increased scale lead to margin expansion and outsized growth in earnings per share, and the broad-based prosperity allowed management to favorably change its guidance for the year. 


HealthEquity grew EPS by a whopping 43% in the last year and earnings per share have improved by 59% annually, over the last five years. The company said it expects fiscal year non-GAAP earnings of $1.06 to $1.13 per share. The company's previous guidance was earnings of $1.05 to $1.11 per share. Moreover, HealthEquity cash balance at quarter end was $330 million and the company remains debt free. HealthEquity has a P/E ratio of 55.10, based on the last twelve months which is way above average (15.9) in the US market. However, shareholders are clearly optimistic as its strong balance sheet gives the company plenty of resources for extra growth, and it has already proven it can grow. These are a few reasons we remain bullish on HealthEquity (NASDAQ:HQY) stock. 

Over the past week, HealthEquity (NASDAQ:HQY) investment grade on the Hade Platform has risen steadily, making it a Top 30 stock. Ironically, this stability in overall rating happens during a time when the overall market is falling, and as our investment grades as an average have consistently declined for the last four months, effectively predicting a correction.

With overall investment grades still lower, we suggest holding large sums of cash and being very selective when making investment decisions. According to HQY stock’s current grade, it might very well be one of those selective opportunities. Why should you trust our ratings? The Hade Platform has proven over the course of three years through the application of Deep Learning Algorithms  (DLA) and Artificial Intelligence (AI) that it consistently outperforms Wall Street consensus estimates (63%) and major benchmarks such as the S&P 500 (250%). Access our premium services and start beating the market. 

Free users on Hade Platform can build a watchlist of stocks and access investment grades from our database of more than 4,000 securities. Premium members can access the platform to get an instant look at which stocks rate highest for value, growth, dividend, and which have the greatest short-term momentum, thereby allowing members to identify areas of opportunity. Premium services include interest trendsrisk analysismachine learning predictions, Top 100 stocksMatriX Portfolio and more. 


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