NEW YORK (TheStreet) -- Shares of HealthEquity (HQY) -- one of the nation's largest non-bank custodians of health-savings accounts -- have risen 50% since their market debut last August, far outpacing the Standard & Poor's 500 Index as well as the health-care sector. The stock may be ripe for even more growth.
HealthEquity is scheduled to report results for its fiscal first quarter ended in April on Monday. At the end of its latest fiscal year ended in January, HealthEquity had almost 1.5 million members enrolled in its HSA program and almost $2.5 billion in assets under management.
Health-savings accounts, or HSAs, have high deductibles but carry tax advantages because the money members set aside for the accounts is tax-free. The plans are good for employers, too, by lowering the costs of what they would pay for their employees' health insurance compared with traditional managed-care plans such as health maintenance organizations.
HealthEquity's shares aren't cheap, trading at 113 times earnings, but as shown by three straight quarters of revenue and earnings beats and by its stock's performance, HealthEquity knows how to make its business work for investors.
Full-year fiscal earnings are now projected to be 30 cents a share, up from 20 cents during the past fiscal year, and fiscal year 2017 earnings are expected to increase to 42 cents a share, which would cut the current price-to-earnings ratio in half. In fiscal 2015, HealthEquity's profit rose more eight-fold on a 42% increase in revenue.
In short, with growth still on the horizon, investors in HealthEquity should be able to profit.