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Why Is Globus Medical (GMED) Down 5.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Globus Medical (GMED - Free Report) . Shares have lost about 5.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Globus Medical due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Globus Medical Q4 Earnings Beat, U.S. Business Strong
Globus Medical reported fourth-quarter 2020 adjusted earnings per share of 58 cents, beating the Zacks Consensus Estimate by 13.7%. The metric also improved 18.4% from the year-ago figure.
Adjusted earnings per share excludes certain non-recurring expenses like amortization of intangibles and acquisition-related costs.
Without the adjustments, the company registered GAAP earnings per share of 52 cents per share, reflecting a 18.2% rise from the year-ago quarter’s earnings per share.
Full-year adjusted earnings per share was $1.44, reflecting a 14.3% decrease from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 6.7%.
Full-year GAAP earnings per share was $1.01, reflecting a plunge of 33.6% from the year-ago period.
Revenues
Fourth-quarter 2020 worldwide sales totaled $233.4 million, up 10.3% year over year (up 9.9% at constant exchange rate or CER). However, the reported figure lagged the Zacks Consensus Estimate marginally by 0.3%. The year-over-year top-line growth was led by strength in Enabling Technologies and U.S. Spine.
Full-year revenues were $789 million, reflecting a 0.5% uptick from the year-ago period (up 0.4% at CER). Again, the metric lagged the Zacks Consensus Estimate marginally by 0.1%.
Quarterly Details
Sales generated in the United States during the quarter under review improved 12% year over year to $198.7 million driven by strong recovery of U.S. spine despite pandemic-related cancellations.
International sales of $34.7 million improved 1.4% from the year-earlier quarter (down 0.9% at CER). According to the company, despite most markets registering growth in the quarter, the overall international performance was impacted by countries experiencing upticks in COVID-19 cases, namely India and the United Kingdom. Japan was also adversely impacted in the quarter, partly due to the pandemic and partly due to issues specific to that market. Also, the international Spinal Implant business was down by 4% during the quarter.
Musculoskeletal Solutions products generated revenues of $215.4 million, up 8.9% year over year. Enabling Technologies product revenues of $18.1 million in the quarter reflected a 30% surge from the prior-year figure.
Margin
Gross profit in the reported quarter rose 5.9% year over year to $172.6 million. Gross margin contracted a huge 303 bps to 73.9% on a 24.8% rise in cost of goods sold to $60.9 million.
Selling, general and administrative expenses in the reported quarter were $92 million, down 0.1% from the year-ago quarter. Research and development expenses also declined 1.6% to $15.2 million.
Overall adjusted operating profit was $65.3 million, up 18.1% year over year. Adjusted operating margin in the reported quarter was 27.9%, a 186 basis-point expansion from the year-ago period.
Cash Position
Globus Medical exited 2020 with cash and cash equivalents, and short-term marketable securities of $426.7 million compared with $311.5 million at the end of 2019.
Notably, the company remains debt free.
Cumulative net cash provided by operating activities at the end of 2020 was $198.8 million compared with the year-ago $171.9 million.
2021 Guidance
Globus Medical has issued the guidance for the year 2021. Considering the year 2019 as a better comparative metric unlike COVID-19 variability-driven 2020, the company is providing 2021 guidance with reference to 2019.
The company expects the full-year net sales to be $880 million, representing 12% growth from the comparable figure in 2019. The Zacks Consensus Estimate for the same is currently pegged at $923.2 million.
The company’s adjusted earnings per share in 2021 is likely to be $1.83, reflecting 9% growth from 2019. The Zacks Consensus Estimate for the same is currently pegged at $2.04.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -16.48% due to these changes.
VGM Scores
At this time, Globus Medical has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Globus Medical has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Globus Medical (GMED) Down 5.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Globus Medical (GMED - Free Report) . Shares have lost about 5.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Globus Medical due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Globus Medical Q4 Earnings Beat, U.S. Business Strong
Globus Medical reported fourth-quarter 2020 adjusted earnings per share of 58 cents, beating the Zacks Consensus Estimate by 13.7%. The metric also improved 18.4% from the year-ago figure.
Adjusted earnings per share excludes certain non-recurring expenses like amortization of intangibles and acquisition-related costs.
Without the adjustments, the company registered GAAP earnings per share of 52 cents per share, reflecting a 18.2% rise from the year-ago quarter’s earnings per share.
Full-year adjusted earnings per share was $1.44, reflecting a 14.3% decrease from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 6.7%.
Full-year GAAP earnings per share was $1.01, reflecting a plunge of 33.6% from the year-ago period.
Revenues
Fourth-quarter 2020 worldwide sales totaled $233.4 million, up 10.3% year over year (up 9.9% at constant exchange rate or CER). However, the reported figure lagged the Zacks Consensus Estimate marginally by 0.3%. The year-over-year top-line growth was led by strength in Enabling Technologies and U.S. Spine.
Full-year revenues were $789 million, reflecting a 0.5% uptick from the year-ago period (up 0.4% at CER). Again, the metric lagged the Zacks Consensus Estimate marginally by 0.1%.
Quarterly Details
Sales generated in the United States during the quarter under review improved 12% year over year to $198.7 million driven by strong recovery of U.S. spine despite pandemic-related cancellations.
International sales of $34.7 million improved 1.4% from the year-earlier quarter (down 0.9% at CER). According to the company, despite most markets registering growth in the quarter, the overall international performance was impacted by countries experiencing upticks in COVID-19 cases, namely India and the United Kingdom. Japan was also adversely impacted in the quarter, partly due to the pandemic and partly due to issues specific to that market. Also, the international Spinal Implant business was down by 4% during the quarter.
Musculoskeletal Solutions products generated revenues of $215.4 million, up 8.9% year over year. Enabling Technologies product revenues of $18.1 million in the quarter reflected a 30% surge from the prior-year figure.
Margin
Gross profit in the reported quarter rose 5.9% year over year to $172.6 million. Gross margin contracted a huge 303 bps to 73.9% on a 24.8% rise in cost of goods sold to $60.9 million.
Selling, general and administrative expenses in the reported quarter were $92 million, down 0.1% from the year-ago quarter. Research and development expenses also declined 1.6% to $15.2 million.
Overall adjusted operating profit was $65.3 million, up 18.1% year over year. Adjusted operating margin in the reported quarter was 27.9%, a 186 basis-point expansion from the year-ago period.
Cash Position
Globus Medical exited 2020 with cash and cash equivalents, and short-term marketable securities of $426.7 million compared with $311.5 million at the end of 2019.
Notably, the company remains debt free.
Cumulative net cash provided by operating activities at the end of 2020 was $198.8 million compared with the year-ago $171.9 million.
2021 Guidance
Globus Medical has issued the guidance for the year 2021. Considering the year 2019 as a better comparative metric unlike COVID-19 variability-driven 2020, the company is providing 2021 guidance with reference to 2019.
The company expects the full-year net sales to be $880 million, representing 12% growth from the comparable figure in 2019. The Zacks Consensus Estimate for the same is currently pegged at $923.2 million.
The company’s adjusted earnings per share in 2021 is likely to be $1.83, reflecting 9% growth from 2019. The Zacks Consensus Estimate for the same is currently pegged at $2.04.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -16.48% due to these changes.
VGM Scores
At this time, Globus Medical has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Globus Medical has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.