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IDEXX Laboratories (IDXX) Q2 Earnings: A Beat in the Cards?
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We expect IDEXX Laboratories, Inc. (IDXX - Free Report) to beat expectations when it reports second-quarter 2017 results on Aug 1, before the opening bell.
Last quarter, the company beat the Zacks Consensus Estimate by 4 cents, delivering a positive earnings surprise of 6.56%. It is worth noting that IDEXX has outperformed the Zacks Consensus Estimate in each of the preceding four quarters at an average of 13.60%. Let’s take a look at how things are shaping up prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that IDEXX is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: IDEXX has an Earnings ESP of +1.19% as the Most Accurate estimate is 85 cents while the Zacks Consensus Estimate is lower at 84 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: IDEXX currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The combination of IDEXX’s Zacks Rank #2 and +1.19% ESP makes us reasonably confident of an earnings beat.
What’s Driving the Better-Than-Expected Earnings?
IDEXX achieved strong organic growth in the U.S. and international regions in the last reported first quarter of 2017, driven by strong global gains in Companion Animal Group (CAG) Diagnostics recurring revenues, including double-digit organic revenue gains across consumable, reference lab and rapid assay revenues, as well as continued expansion of IDEXX's premium instrument installed base. The company expects this bullish trend to continue in the upcoming quarters as well.
Overall, IDEXX raised its 2017 revenue outlook by $15 million to the range of $1,925--$1,950 million, reflecting organic revenue growth expectations between 9.5% and 11%. The Zacks Consensus Estimate for 2017 revenues is pegged at $1.92 billion, within the guided range.
On the bottom-line front, the company raised its EPS guidance to $2.95--$3.11 per share from the earlier range of $2.85–$3.01, supported by continued operating margin expansion aligned with its long-term goals. The updated outlook represents EPS growth of 21%--27% on a reported basis. The Zacks Consensus Estimate for EPS is pegged at $3.05, which is within the guided range.
We are upbeat about the company’s innovation-based global strategy that is leading to CAG Diagnostics growth. In June, IDEXX announced the addition of rVetLink to its portfolio of technology applications. Notably, rVetLink is an advanced all-inclusive referral management solution designed for specialty care hospitals that simplifies the referral procedure between primary care and specialty care veterinarians.
This apart, IDEXX continues to display solid growth with respect to international expansion. The company has been significantly benefitting from the companion animal market of emerging nations demonstrating the bountiful opportunities. Further, management’s consistent share buybacks reflect its strong free cash flow reserve. We believe, the outcome of these endeavors will be reflected in the second-quarter performance.
On the flip side, foreign currency fluctuation is a major headwind for the company. Another concern is the company’s high reliance on third-party distributors. The purchasing dynamics of distributors have a significant impact on the company’s sales of instrument consumables and rapid assay products. Also, the company is exposed to higher operating expenses pertaining to increased head count along with higher investments targeted toward growth acceleration in geographical expansion in the U.S. and internationally, and portfolio expansion.
Also, the competitive landscape in the domestic and overseas markets weighs on IDEXX’s performance. This struggle to gain market share might also prove to be a drag on second-quarter 2017 results.
Other Stocks to Consider
Here are some other companies you may consider as our model shows that they also have the right combination of elements to post an earnings beat in the upcoming quarter:
Becton, Dickinson and Company (BDX - Free Report) has an Earnings ESP of +0.41% and a Zacks Rank #2.
Stryker Corporation (SYK - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank #2.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
IDEXX Laboratories (IDXX) Q2 Earnings: A Beat in the Cards?
We expect IDEXX Laboratories, Inc. (IDXX - Free Report) to beat expectations when it reports second-quarter 2017 results on Aug 1, before the opening bell.
Last quarter, the company beat the Zacks Consensus Estimate by 4 cents, delivering a positive earnings surprise of 6.56%. It is worth noting that IDEXX has outperformed the Zacks Consensus Estimate in each of the preceding four quarters at an average of 13.60%. Let’s take a look at how things are shaping up prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that IDEXX is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: IDEXX has an Earnings ESP of +1.19% as the Most Accurate estimate is 85 cents while the Zacks Consensus Estimate is lower at 84 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: IDEXX currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The combination of IDEXX’s Zacks Rank #2 and +1.19% ESP makes us reasonably confident of an earnings beat.
What’s Driving the Better-Than-Expected Earnings?
IDEXX achieved strong organic growth in the U.S. and international regions in the last reported first quarter of 2017, driven by strong global gains in Companion Animal Group (CAG) Diagnostics recurring revenues, including double-digit organic revenue gains across consumable, reference lab and rapid assay revenues, as well as continued expansion of IDEXX's premium instrument installed base. The company expects this bullish trend to continue in the upcoming quarters as well.
Overall, IDEXX raised its 2017 revenue outlook by $15 million to the range of $1,925--$1,950 million, reflecting organic revenue growth expectations between 9.5% and 11%. The Zacks Consensus Estimate for 2017 revenues is pegged at $1.92 billion, within the guided range.
IDEXX Laboratories, Inc. Price and EPS Surprise
IDEXX Laboratories, Inc. Price and EPS Surprise | IDEXX Laboratories, Inc. Quote
On the bottom-line front, the company raised its EPS guidance to $2.95--$3.11 per share from the earlier range of $2.85–$3.01, supported by continued operating margin expansion aligned with its long-term goals. The updated outlook represents EPS growth of 21%--27% on a reported basis. The Zacks Consensus Estimate for EPS is pegged at $3.05, which is within the guided range.
We are upbeat about the company’s innovation-based global strategy that is leading to CAG Diagnostics growth. In June, IDEXX announced the addition of rVetLink to its portfolio of technology applications. Notably, rVetLink is an advanced all-inclusive referral management solution designed for specialty care hospitals that simplifies the referral procedure between primary care and specialty care veterinarians.
This apart, IDEXX continues to display solid growth with respect to international expansion. The company has been significantly benefitting from the companion animal market of emerging nations demonstrating the bountiful opportunities. Further, management’s consistent share buybacks reflect its strong free cash flow reserve. We believe, the outcome of these endeavors will be reflected in the second-quarter performance.
On the flip side, foreign currency fluctuation is a major headwind for the company. Another concern is the company’s high reliance on third-party distributors. The purchasing dynamics of distributors have a significant impact on the company’s sales of instrument consumables and rapid assay products. Also, the company is exposed to higher operating expenses pertaining to increased head count along with higher investments targeted toward growth acceleration in geographical expansion in the U.S. and internationally, and portfolio expansion.
Also, the competitive landscape in the domestic and overseas markets weighs on IDEXX’s performance. This struggle to gain market share might also prove to be a drag on second-quarter 2017 results.
Other Stocks to Consider
Here are some other companies you may consider as our model shows that they also have the right combination of elements to post an earnings beat in the upcoming quarter:
Becton, Dickinson and Company (BDX - Free Report) has an Earnings ESP of +0.41% and a Zacks Rank #2.
Thermo Fisher Scientific Inc.(TMO - Free Report) has an Earnings ESP of +0.44% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stryker Corporation (SYK - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank #2.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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