Back to top

Analyst Blog

Waters Corporation (WAT - Analyst Report) reported net income of $98.0 million or $1.14 a share in the third quarter of 2013 compared with $99.1 million or $1.12 a share in the year-earlier quarter. The reported earnings missed the Zacks Consensus Estimate of $1.22 by 2.4%.

The year-over-year growth in earnings per share was driven by increased demands in the government and academic sectors along with a lower share count in the quarter.

Excluding non-recurring items, the EPS for the quarter was $1.19 per share compared with $1.18 in the year-ago quarter.

Revenues

Total revenue in the third quarter increased 1.6% year on year to $457.3 million. However, it missed the Zacks Consensus Estimate of $463 million by 1.3%. Unfavorable currency translation impacted the top line by 2%.

Margins

Gross profit for the quarter was $265.7 million, which was down marginally by 0.5% from $267.2 million reported in the prior-year quarter. Gross margins for the quarter were down to 58.1% from 59.4% in the prior-year quarter. The decline was primarily attributable to unfavorable currency translation and the sluggish performance of the company’s pharmaceutical business despite improvement in global business conditions across the chemical industry.

Operating income for the quarter stood at $119.1 million, which declined 2.13% from $121.7 million in the third quarter of 2012. The company incurred total SG&A expense of approximately $120.6 million in the quarter, an increase of 4.5% year over year. R&D expense was around $23.6 million in the quarter versus $23.8 million in the prior-year quarter. Operating margin was down from 27.0% to 26.1% year over year.  

Balance Sheet

Exiting the quarter, cash, cash equivalents and investments reached approximately $1.7 billion compared with $1.5 billion in last year’s same quarter. Long-term debt was $1.2 billion. Debt-to-capitalization ratio was 41.7% compared with 41.6% in the prior-year quarter.   

Moving Ahead

Waters Corporation continues to see considerable stability in its end markets and a healthy acceptance of new products. However, the analytical instrument and systems market remains highly competitive.

Waters Corporation currently carries a Zacks Rank #3 (Hold). Some other favorably ranked companies from the same industry include Mettler-Toledo International Inc. (MTD - Snapshot Report), Stratasys Ltd. (SSYS - Analyst Report) and Logitech International S.A. (LOGI - Analyst Report). All three carry Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.