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Why Is Globus Medical (GMED) Down 3.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Globus Medical (GMED - Free Report) . Shares have lost about 3.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Globus Medical Q1 Earnings Beat Estimates, Margins Up
Globus Medical reported first-quarter 2021 adjusted earnings per share of 49 cents, beating the Zacks Consensus Estimate by 36.1%. The metric also improved 68.9% 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 44 cents per share, reflecting a 76% surge from the year-ago quarter’s earnings per share.
Revenues
First-quarter 2021 worldwide sales totaled $227.3 million, up 19.3% year over year (up 18.7% at constant exchange rate or CER). The reported figure surpassed the Zacks Consensus Estimate by 15%. The year-over-year growth in the top line was led by strength in Enabling Technologies and U.S. Spine.
Quarterly Details
Sales generated in the United States during the quarter under review improved 22% year over year to $193.3 million, driven by the continued strength in the U.S. Spine business as well as higher INR revenues stemming from additional capital sales.
International sales of $34 million improved 5.9% from the year-earlier quarter (up 2.1% at CER). Growth in robotics was the key contributing factor in year-over-year improvement. However, the growth was being partially offset by declines in Japan. Also, the international Spinal Implant business was flat during the quarter.
Musculoskeletal Solutions products generated revenues of $212.4 million, up 16.4% year over year. Enabling Technologies product revenues of $14.9 million in the quarter reflected an 85.8% surge from the prior-year figure.
Margin
Gross profit in the reported quarter rose 21.6% year over year to $172.3 million. Gross margin expanded 143 basis points (bps) to 75.8% on a 13% rise in cost of goods sold to $55 million.
Selling, general and administrative expenses in the reported quarter were $97.9 million, up 4.7% from the year-ago quarter. Research and development expenses declined 3.1% to $14.9 million.
Overall adjusted operating profit was $59.5 million, reflecting a surge of 81.6% year over year. Adjusted operating margin in the reported quarter was 26.2%, showing an 898 basis-point expansion from the year-ago period.
Cash Position
Globus Medical exited the first quarter of 2021 with cash and cash equivalents, and short-term marketable securities of $403.6 million compared with $426.7 million at the end of the fourth quarter 2020.
Notably, the company is debt free.
Cumulative net cash provided by operating activities at the end of first-quarter 2021 was $63.6 million compared with the year-ago $42.3 million.
2021 Guidance
The company has raised its full-year 2021 guidance.
The company now expects full-year net sales at $925 million, calling for 5.1% growth from the previous figure of $880 million. The Zacks Consensus Estimate for the same is currently pegged at $882.4 million.
The company now expects adjusted earnings per share in 2021 of $1.89, suggesting 3.3% growth from the previous figure of $1.83. The Zacks Consensus Estimate for the same is currently pegged at $1.84.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Globus Medical has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Globus Medical has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Globus Medical (GMED) Down 3.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Globus Medical (GMED - Free Report) . Shares have lost about 3.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Globus Medical Q1 Earnings Beat Estimates, Margins Up
Globus Medical reported first-quarter 2021 adjusted earnings per share of 49 cents, beating the Zacks Consensus Estimate by 36.1%. The metric also improved 68.9% 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 44 cents per share, reflecting a 76% surge from the year-ago quarter’s earnings per share.
Revenues
First-quarter 2021 worldwide sales totaled $227.3 million, up 19.3% year over year (up 18.7% at constant exchange rate or CER). The reported figure surpassed the Zacks Consensus Estimate by 15%. The year-over-year growth in the top line was led by strength in Enabling Technologies and U.S. Spine.
Quarterly Details
Sales generated in the United States during the quarter under review improved 22% year over year to $193.3 million, driven by the continued strength in the U.S. Spine business as well as higher INR revenues stemming from additional capital sales.
International sales of $34 million improved 5.9% from the year-earlier quarter (up 2.1% at CER). Growth in robotics was the key contributing factor in year-over-year improvement. However, the growth was being partially offset by declines in Japan. Also, the international Spinal Implant business was flat during the quarter.
Musculoskeletal Solutions products generated revenues of $212.4 million, up 16.4% year over year. Enabling Technologies product revenues of $14.9 million in the quarter reflected an 85.8% surge from the prior-year figure.
Margin
Gross profit in the reported quarter rose 21.6% year over year to $172.3 million. Gross margin expanded 143 basis points (bps) to 75.8% on a 13% rise in cost of goods sold to $55 million.
Selling, general and administrative expenses in the reported quarter were $97.9 million, up 4.7% from the year-ago quarter. Research and development expenses declined 3.1% to $14.9 million.
Overall adjusted operating profit was $59.5 million, reflecting a surge of 81.6% year over year. Adjusted operating margin in the reported quarter was 26.2%, showing an 898 basis-point expansion from the year-ago period.
Cash Position
Globus Medical exited the first quarter of 2021 with cash and cash equivalents, and short-term marketable securities of $403.6 million compared with $426.7 million at the end of the fourth quarter 2020.
Notably, the company is debt free.
Cumulative net cash provided by operating activities at the end of first-quarter 2021 was $63.6 million compared with the year-ago $42.3 million.
2021 Guidance
The company has raised its full-year 2021 guidance.
The company now expects full-year net sales at $925 million, calling for 5.1% growth from the previous figure of $880 million. The Zacks Consensus Estimate for the same is currently pegged at $882.4 million.
The company now expects adjusted earnings per share in 2021 of $1.89, suggesting 3.3% growth from the previous figure of $1.83. The Zacks Consensus Estimate for the same is currently pegged at $1.84.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Globus Medical has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Globus Medical has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.