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Waters Corporation (WAT - Free Report) has a brilliant earnings beat streak that spanned ten quarters of positive earnings surprises, which it broke just once as it reported in-line earnings in the quarter before last. In first-quarter 2017, Waters Corp. continued its impressive streak, as the company’s adjusted earnings of $1.46 per share trumped the Zacks Consensus Estimate of $1.33 by 9.8%.
The bottom-line figure fared even better in year-over-year comparison, reflecting striking growth of 15.9% from the prior-year quarter tally of $1.26. Remarkable, broad-based top-line expansion, along with spectacular growth in Asia, aided the earnings beat.
Solid operational execution backed by the company’s efficient business model also lent strength to the results. Further, a decline in interest expenses aided quarterly profits.
Inside the Headlines
In the reported quarter, Waters Corp.’s net sales grew 5% year over year to $498 million and also came ahead of the Zacks Consensus Estimate of $487 million.
The upside in the top line came on the back of robust performance in the industrial end markets and the bio/pharmaceutical end market (each up 9% on a constant currency basis). However, the growth momentum was somewhat arrested by a decline of 6% (on a constant currency basis) in the government and academic markets.
Also, impressive contribution from sale of key products across major geographies supplemented quarterly sales growth. In addition, Water Corp.’s recurring revenues and instrument system sales grew 4% and 6%, respectively, driving top-line growth.
In terms of geographies, Waters Corp. witnessed strong sales in Asia and Europe, which posted 13% and 9% growth, respectively, at constant currency. However, sales in the U.S. declined 2% year over year.
Total selling and administrative expenses in the quarter came in at $130.5 million, up from $129.4 million in first-quarter 2016. Research and development outlay for the quarter was $30.8 million compared with $29.4 million incurred a year ago.
Despite the rise in these expenses, operating income in the quarter climbed 5.5% year over year to $118.9 million.
Liquidity
Waters Corp.’s cash, cash equivalents and investments at the quarter end amounted to approximately $3 billion, higher than $2.81 billion as on Dec 31, 2016. The company’s total liabilities at quarter end increased to about $2.41 billion from $2.36 billion as on Dec 31, 2016.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corp.’s leading position in the high-performance liquid chromatography and mass spectrometry markets is its key strength that has acted as a strong revenue driver for the past few quarters. The company’s bright pharmaceutical business ended 2016 on a healthy note and looks set to continue its momentum going ahead into 2017. Waters Corp. is also seeing encouraging trends in its industrial businesses.
Waters Corp.’s exposure in the pharma/biotech industry is primarily in regulated commercial lab environments, where demand is non-discretionary and not prone to cyclicality. This helps the company mitigate uncertain client spending stemming from macroeconomic volatility. Also, given the fact that liquid chromatography is used in a huge variety of applications, Waters Corp. is well poised to benefit significantly from this business, going forward.
Stocks to Consider
Waters Corp. currently holds a Zacks Rank #2 (Buy). Some other well ranked stocks in the broader sector include Motorola Solutions, Inc. (MSI - Free Report) , PC-Tel, Inc. and NCR Corporation . While Motorola and PC-Tel sport a Zacks Rank #1 (Strong Buy), NCR holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Motorola has a striking earnings surprise history for the last four quarters, having beaten estimates all through, for an impressive average beat of 16.4%.
PC-Tel generated three massive beats in the trailing four quarters, for an average positive surprise of 125%.
NCR also has an excellent earnings surprise history, with an average beat of 11% for the trailing four quarters, beating estimates all through.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Waters Corp. (WAT) Q1 Earnings Beat, Organic Growth Strong
Waters Corporation (WAT - Free Report) has a brilliant earnings beat streak that spanned ten quarters of positive earnings surprises, which it broke just once as it reported in-line earnings in the quarter before last. In first-quarter 2017, Waters Corp. continued its impressive streak, as the company’s adjusted earnings of $1.46 per share trumped the Zacks Consensus Estimate of $1.33 by 9.8%.
The bottom-line figure fared even better in year-over-year comparison, reflecting striking growth of 15.9% from the prior-year quarter tally of $1.26. Remarkable, broad-based top-line expansion, along with spectacular growth in Asia, aided the earnings beat.
Solid operational execution backed by the company’s efficient business model also lent strength to the results. Further, a decline in interest expenses aided quarterly profits.
Inside the Headlines
In the reported quarter, Waters Corp.’s net sales grew 5% year over year to $498 million and also came ahead of the Zacks Consensus Estimate of $487 million.
The upside in the top line came on the back of robust performance in the industrial end markets and the bio/pharmaceutical end market (each up 9% on a constant currency basis). However, the growth momentum was somewhat arrested by a decline of 6% (on a constant currency basis) in the government and academic markets.
Also, impressive contribution from sale of key products across major geographies supplemented quarterly sales growth. In addition, Water Corp.’s recurring revenues and instrument system sales grew 4% and 6%, respectively, driving top-line growth.
In terms of geographies, Waters Corp. witnessed strong sales in Asia and Europe, which posted 13% and 9% growth, respectively, at constant currency. However, sales in the U.S. declined 2% year over year.
Total selling and administrative expenses in the quarter came in at $130.5 million, up from $129.4 million in first-quarter 2016. Research and development outlay for the quarter was $30.8 million compared with $29.4 million incurred a year ago.
Despite the rise in these expenses, operating income in the quarter climbed 5.5% year over year to $118.9 million.
Liquidity
Waters Corp.’s cash, cash equivalents and investments at the quarter end amounted to approximately $3 billion, higher than $2.81 billion as on Dec 31, 2016. The company’s total liabilities at quarter end increased to about $2.41 billion from $2.36 billion as on Dec 31, 2016.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corporation Price, Consensus and EPS Surprise | Waters Corporation Quote
Our Take
Waters Corp.’s leading position in the high-performance liquid chromatography and mass spectrometry markets is its key strength that has acted as a strong revenue driver for the past few quarters. The company’s bright pharmaceutical business ended 2016 on a healthy note and looks set to continue its momentum going ahead into 2017. Waters Corp. is also seeing encouraging trends in its industrial businesses.
Waters Corp.’s exposure in the pharma/biotech industry is primarily in regulated commercial lab environments, where demand is non-discretionary and not prone to cyclicality. This helps the company mitigate uncertain client spending stemming from macroeconomic volatility. Also, given the fact that liquid chromatography is used in a huge variety of applications, Waters Corp. is well poised to benefit significantly from this business, going forward.
Stocks to Consider
Waters Corp. currently holds a Zacks Rank #2 (Buy). Some other well ranked stocks in the broader sector include Motorola Solutions, Inc. (MSI - Free Report) , PC-Tel, Inc. and NCR Corporation . While Motorola and PC-Tel sport a Zacks Rank #1 (Strong Buy), NCR holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Motorola has a striking earnings surprise history for the last four quarters, having beaten estimates all through, for an impressive average beat of 16.4%.
PC-Tel generated three massive beats in the trailing four quarters, for an average positive surprise of 125%.
NCR also has an excellent earnings surprise history, with an average beat of 11% for the trailing four quarters, beating estimates all through.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>