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Neogen (NEOG) Down 19% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Neogen (NEOG - Free Report) . Shares have lost about 19% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Neogen 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 catalysts.
Neogen Q2 Earnings Lag Estimates, Revenues Surpass
Neogen Corporation reported second-quarter fiscal 2022 earnings per share of 10 cents compared with the year-ago quarter’s 15 cents. It missed the Zacks Consensus Estimate by 41.2%.
Revenues for the fiscal second quarter increased 13.5% on a year-over-year basis to $130.5 million. It surpassed the Zacks Consensus Estimate by 1.2%. Per the company, the second quarter was the 118th of the past 124 quarters of revenue increases compared to the same period in the previous year.
Segments in Detail
For the quarter, the company registered Food Safety revenues of $67.1 million, reflecting 16.7% (up 11% organically) year-over-year growth. The December 2020 acquisition of Megazyme contributed to the segment’s total revenues. The Soleris product line continued to gain market share during the quarter, as it registered a 22% rise on robust equipment sales growth. Meanwhile, sales of the novel AccuPoint Advanced NG handheld sanitation monitoring system drove a 19% increase in reader sales. The company's Listeria Right Now 60-minute test system also saw a 35% increase versus the previous year.
The upside in the Food Safety business was also driven by strong growth across the company's diagnostics portfolio, which includes increases of 11%, 10%, 6% and 8% in culture media, natural toxins, allergens and general sanitation product lines, respectively.
Animal Safety revenues in the fiscal second quarter were $63.4 million, up 10.3% (10% organically) year over year. The upside can be attributed to strong growth in the veterinary instruments line (up 30%), which primarily includes needles and syringes; and the animal care line (up 18%), driven by the relaunch of ThyroKare supplement in February 2021 and strength in equine and companion animal markets, that returned to pre-pandemic demand levels. During the quarter, the company also started integrating the September 2021 buyout of CAPInnoVet into the business. Further, a 46% increase in insect control products was driven by the continued market share gain of the StandGuard product line. This growth was offset by a 14% decline in rodent control products and a 2% drop in cleaners and disinfectants year over year.
Revenues from Neogen’s worldwide animal genomics business increased 8% in the fiscal second quarter on a year-over-year basis. The upside was primarily driven by continued strength in beef and dairy cattle, sheep and poultry markets. However, this growth was partially offset by lower sales of services into the companion animal market.
Revenues from Neogen’s international operations increased 20% in the second quarter of fiscal 2022. The company’s U.K. business gained 11% in pounds on strong sales of the company's One Broth, One Plate culture media solution to commercial labs in the country as well as enhanced sales growth of cleaners and disinfectants to Asia.
Neogen’s revenues from China in the second quarter of fiscal 2022 increased 28%, driven by new sales of Megazyme products and continued solid growth in genomic services. Neogen’s Australasia revenues surged 27% in local currency on growth in beef and sheep animal genomic services, and surge in diagnostic products sales. Meanwhile, Neogen Latinoamerica business and its Brazilian operations were up 10% and down 6%, respectively, in local currency in the fiscal second quarter.
Margin Details
Neogen’s fiscal second-quarter gross profit increased 13.9% year over year to $60.6 million. Gross margin expanded 15 basis points (bps) to 46.4%.
Sales and marketing expenses rose 19.5% to $21.2 million, whereas administrative expenses increased 85.5% from the prior-year quarter to $22.6 million. Research & development expenses were $4.3 million, up 6.8% from the year-ago quarter. Operating costs totaled $48.1 million, up 41.7% year over year.
In the reported quarter, operating income was $12.5 million, down 35.2% from the year-ago quarter’s level. Subsequently, operating margin contracted 718 bps to 9.6%.
Cash Position
The company exited the fiscal second quarter with cash and investments of $389.2 million, down from $400.9 million at the end of the fiscal first quarter. The company had no debt on the balance sheet at quarter-end.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Neogen has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Neogen has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Neogen (NEOG) Down 19% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Neogen (NEOG - Free Report) . Shares have lost about 19% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Neogen 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 catalysts.
Neogen Q2 Earnings Lag Estimates, Revenues Surpass
Neogen Corporation reported second-quarter fiscal 2022 earnings per share of 10 cents compared with the year-ago quarter’s 15 cents. It missed the Zacks Consensus Estimate by 41.2%.
Revenues for the fiscal second quarter increased 13.5% on a year-over-year basis to $130.5 million. It surpassed the Zacks Consensus Estimate by 1.2%. Per the company, the second quarter was the 118th of the past 124 quarters of revenue increases compared to the same period in the previous year.
Segments in Detail
For the quarter, the company registered Food Safety revenues of $67.1 million, reflecting 16.7% (up 11% organically) year-over-year growth. The December 2020 acquisition of Megazyme contributed to the segment’s total revenues. The Soleris product line continued to gain market share during the quarter, as it registered a 22% rise on robust equipment sales growth. Meanwhile, sales of the novel AccuPoint Advanced NG handheld sanitation monitoring system drove a 19% increase in reader sales. The company's Listeria Right Now 60-minute test system also saw a 35% increase versus the previous year.
The upside in the Food Safety business was also driven by strong growth across the company's diagnostics portfolio, which includes increases of 11%, 10%, 6% and 8% in culture media, natural toxins, allergens and general sanitation product lines, respectively.
Animal Safety revenues in the fiscal second quarter were $63.4 million, up 10.3% (10% organically) year over year. The upside can be attributed to strong growth in the veterinary instruments line (up 30%), which primarily includes needles and syringes; and the animal care line (up 18%), driven by the relaunch of ThyroKare supplement in February 2021 and strength in equine and companion animal markets, that returned to pre-pandemic demand levels. During the quarter, the company also started integrating the September 2021 buyout of CAPInnoVet into the business. Further, a 46% increase in insect control products was driven by the continued market share gain of the StandGuard product line. This growth was offset by a 14% decline in rodent control products and a 2% drop in cleaners and disinfectants year over year.
Revenues from Neogen’s worldwide animal genomics business increased 8% in the fiscal second quarter on a year-over-year basis. The upside was primarily driven by continued strength in beef and dairy cattle, sheep and poultry markets. However, this growth was partially offset by lower sales of services into the companion animal market.
Revenues from Neogen’s international operations increased 20% in the second quarter of fiscal 2022. The company’s U.K. business gained 11% in pounds on strong sales of the company's One Broth, One Plate culture media solution to commercial labs in the country as well as enhanced sales growth of cleaners and disinfectants to Asia.
Neogen’s revenues from China in the second quarter of fiscal 2022 increased 28%, driven by new sales of Megazyme products and continued solid growth in genomic services. Neogen’s Australasia revenues surged 27% in local currency on growth in beef and sheep animal genomic services, and surge in diagnostic products sales. Meanwhile, Neogen Latinoamerica business and its Brazilian operations were up 10% and down 6%, respectively, in local currency in the fiscal second quarter.
Margin Details
Neogen’s fiscal second-quarter gross profit increased 13.9% year over year to $60.6 million. Gross margin expanded 15 basis points (bps) to 46.4%.
Sales and marketing expenses rose 19.5% to $21.2 million, whereas administrative expenses increased 85.5% from the prior-year quarter to $22.6 million. Research & development expenses were $4.3 million, up 6.8% from the year-ago quarter. Operating costs totaled $48.1 million, up 41.7% year over year.
In the reported quarter, operating income was $12.5 million, down 35.2% from the year-ago quarter’s level. Subsequently, operating margin contracted 718 bps to 9.6%.
Cash Position
The company exited the fiscal second quarter with cash and investments of $389.2 million, down from $400.9 million at the end of the fiscal first quarter. The company had no debt on the balance sheet at quarter-end.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Neogen has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Neogen has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.