eHealth Approves $50M Share Buyback - Analyst Blog

In its concerted effort to enhance shareholder value, the board of directors of eHealth, Inc. EHTH has authorized the company to repurchase $50 million worth of shares.

The board of directors had approved share repurchase programs worth $30 million each year since 2010. eHealth will buy back $200 million worth of shares when the recent authorization exhausts.

eHealth had nothing remaining from its previous authorization. In June last year, the company had exhausted its $60 million repurchase authorization by buying back 2.9 million shares.

The new authorization is duly supported by the eHealth's solid financial position, with cash and cash equivalents of $107.1 million as of the end of 2013 and cash from operations of about $21 million. Retained earnings at year-end also stood solid at $30.5 million (up 6% year over year). A sustained solid operational performance continues to cushion eHealth's sturdy financial position.

eHealth presently carries a Zacks Rank #5 (Strong Sell). With the news of the share buyback authorization poised to boost investor confidence in the stock and drive the bottom line, we expect analysts to raise their estimates going forward and exert upward pressure on the Zacks Rank. There were no upward earnings estimate revisions over the last 60 days.

The Zacks Consensus Estimate is currently pegged at 2 cents for 2014 and 60 cents for 2015. The consensus estimates translate into a year-over-year improvement of nearly 70% and 173% respectively. The estimate for 2014 is, however, shy of the company-provided guidance of 43 to 51 cents per share.

Last month, another insurance broker Brown & Brown, Inc. BRO was authorized to repurchase upto $25 million worth of shares.

Other Stocks to Consider

Better-ranked insurance brokers worth considering are Erie Indemnity Company ERIE and Marsh & McLennan Companies, Inc. MMC. Both these stocks sport a Zacks Rank #2 (Buy).