A month has gone by since the last earnings report for PerkinElmer, Inc. . Shares have added about 2% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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.
PerkinElmer Misses Q4 Earnings & Revenue Estimates
Waltham, MA-based PerkinElmer Inc , a worldwide provider of products, services and solutions to the diagnostics, research, and laboratory service markets, reported fourth-quarter 2016 earnings of $0.83 per share.
Despite having a streak of positive earnings surprises in the last three quarters with an average beat of 4.8%, adjusted earnings missed the Zacks Consensus Estimate of $0.86 in the fourth quarter. Furthermore, the figure missed management’s guided range of $0.85 to $0.87 and declined almost 3.5% on a year-over-year basis.
The company reported adjusted revenues of $567.0 million, which lagged the Zacks Consensus Estimate of $613 million. In fact, revenues were below management’s guided range of $610–$620 million.
Notably, PerkinElmer announced the divestment of its Medical Imaging business segment to Varian Medical Systems in the reported quarter.
For the full year, the company reported adjusted earnings of $2.60 per share, up 11.6% on a year-over-year basis. Adjusted revenue for the full year was $2.12 billion, up 2% organically.
Segment Details
Discovery & Analytical Solutions (DAS):Revenues totaled $409.9 million in the fourth quarter compared with $418.2 million in the year-ago quarter. This marked a 1% decline organically.
For the full year, the segment’s revenues inched down 1% on a reported basis. Revenues grossed $1,513.0 million, marginally down from $1,528.4 million in 2015.
Meanwhile, operating profit margin (as a percentage of revenues) in the fourth quarter was 20.8%, a little above the prior-year quarter’s level of 20.7%.
Furthermore, the company reported adjusted operating profit margin of 17.6% for the full year at the segment, above the year-ago figure of 16.2%.
Diagnostics Segment: In this segment, revenues were $156.8 million in the fourth quarter, as compared with $151.7 million in the year-ago quarter. This marked a 7% increase organically.
For the full year, the segment’s revenues rose 8% organically. Notably, revenues at the segment totaled $602.5 million, much higher than $576.4 million in 2015.
Meanwhile, operating profit margin (as a percentage of revenues) for the segment in the fourth quarter was 29.1%, flat on a year-over-year basis.
Furthermore, the company reported adjusted operating profit margin of 29% for the full year for the segment, above the year-ago figure of 27.9%.
Margin Details
Adjusted gross margin, as a percentage of revenues, was 50% in the quarter, up 90 basis points (bps) year over year, driven by successful cost-cutting (Lean) initiatives, productivity improvements and favorable product mix.
Adjusted selling, general & administrative (SG&A) expenses, as a percentage of revenues, were 23%, down 80 bps from the year-ago quarter owing to the success of the company’s strategic initiatives.
Research and Development (R&D) expenses, as a percentage of revenues, rose 120 bps in the quarter to $32.9 million, thanks to incremental investments in product development and the ongoing investments in Vanadis Diagnostics. Notably, PerkinElmer completed the acquisition of the Sweden-based organization in Jan 2016.
As a result, the company’s overall adjusted operating margin from continuing operations increased by 60 bps.
Financial Details
For the full year, PerkinElmer’s operating cash flow from continuing operations was $323.8 million, compared with $263.8 million in the prior year.
Guidance
For full-year 2017, PerkinElmer expects adjusted earnings per share in the band of $2.75 to $2.85. This represents growth of approximately 8% to 12% at constant currency (cc). Revenues for the full year are expected in the band of $2.19 billion to $2.2 billion. Notably, this marks growth of 4% organically and includes an approximate $40 million impact of foreign exchange headwinds. The revenue forecast also represents a $30 million-headwind related to the company’s recent acquisition of Tulip, an India-based diagnostics company.
For the first quarter of 2017, management expects revenues in the band of $500 million to $510 million, which marks organic revenue growth of 2% to 3%. The first quarter of 2017 adjusted earnings per share are expected in the range of $0.52 to $0.54.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted 11.8% downward due to these changes.
VGM Scores
At this time, PerkinElmer's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'D'. Following a similar 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 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
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PerkinElmer (PKI) Up 2% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for PerkinElmer, Inc. . Shares have added about 2% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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.
PerkinElmer Misses Q4 Earnings & Revenue Estimates
Waltham, MA-based PerkinElmer Inc , a worldwide provider of products, services and solutions to the diagnostics, research, and laboratory service markets, reported fourth-quarter 2016 earnings of $0.83 per share.
Despite having a streak of positive earnings surprises in the last three quarters with an average beat of 4.8%, adjusted earnings missed the Zacks Consensus Estimate of $0.86 in the fourth quarter. Furthermore, the figure missed management’s guided range of $0.85 to $0.87 and declined almost 3.5% on a year-over-year basis.
The company reported adjusted revenues of $567.0 million, which lagged the Zacks Consensus Estimate of $613 million. In fact, revenues were below management’s guided range of $610–$620 million.
Notably, PerkinElmer announced the divestment of its Medical Imaging business segment to Varian Medical Systems in the reported quarter.
For the full year, the company reported adjusted earnings of $2.60 per share, up 11.6% on a year-over-year basis. Adjusted revenue for the full year was $2.12 billion, up 2% organically.
Segment Details
Discovery & Analytical Solutions (DAS):Revenues totaled $409.9 million in the fourth quarter compared with $418.2 million in the year-ago quarter. This marked a 1% decline organically.
For the full year, the segment’s revenues inched down 1% on a reported basis. Revenues grossed $1,513.0 million, marginally down from $1,528.4 million in 2015.
Meanwhile, operating profit margin (as a percentage of revenues) in the fourth quarter was 20.8%, a little above the prior-year quarter’s level of 20.7%.
Furthermore, the company reported adjusted operating profit margin of 17.6% for the full year at the segment, above the year-ago figure of 16.2%.
Diagnostics Segment: In this segment, revenues were $156.8 million in the fourth quarter, as compared with $151.7 million in the year-ago quarter. This marked a 7% increase organically.
For the full year, the segment’s revenues rose 8% organically. Notably, revenues at the segment totaled $602.5 million, much higher than $576.4 million in 2015.
Meanwhile, operating profit margin (as a percentage of revenues) for the segment in the fourth quarter was 29.1%, flat on a year-over-year basis.
Furthermore, the company reported adjusted operating profit margin of 29% for the full year for the segment, above the year-ago figure of 27.9%.
Margin Details
Adjusted gross margin, as a percentage of revenues, was 50% in the quarter, up 90 basis points (bps) year over year, driven by successful cost-cutting (Lean) initiatives, productivity improvements and favorable product mix.
Adjusted selling, general & administrative (SG&A) expenses, as a percentage of revenues, were 23%, down 80 bps from the year-ago quarter owing to the success of the company’s strategic initiatives.
Research and Development (R&D) expenses, as a percentage of revenues, rose 120 bps in the quarter to $32.9 million, thanks to incremental investments in product development and the ongoing investments in Vanadis Diagnostics. Notably, PerkinElmer completed the acquisition of the Sweden-based organization in Jan 2016.
As a result, the company’s overall adjusted operating margin from continuing operations increased by 60 bps.
Financial Details
For the full year, PerkinElmer’s operating cash flow from continuing operations was $323.8 million, compared with $263.8 million in the prior year.
Guidance
For full-year 2017, PerkinElmer expects adjusted earnings per share in the band of $2.75 to $2.85. This represents growth of approximately 8% to 12% at constant currency (cc). Revenues for the full year are expected in the band of $2.19 billion to $2.2 billion. Notably, this marks growth of 4% organically and includes an approximate $40 million impact of foreign exchange headwinds. The revenue forecast also represents a $30 million-headwind related to the company’s recent acquisition of Tulip, an India-based diagnostics company.
For the first quarter of 2017, management expects revenues in the band of $500 million to $510 million, which marks organic revenue growth of 2% to 3%. The first quarter of 2017 adjusted earnings per share are expected in the range of $0.52 to $0.54.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted 11.8% downward due to these changes.
PerkinElmer, Inc. Price and Consensus
PerkinElmer, Inc. Price and Consensus | PerkinElmer, Inc. Quote
VGM Scores
At this time, PerkinElmer's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'D'. Following a similar 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 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.