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Waters (WAT) Q2 Earnings Beat on Broad-Based Sales Growth
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Waters Corporation (WAT - Free Report) has a brilliant earnings beat streak, spanning 12 quarters of positive earnings surprises, which the company broke just once as it reported in-line earnings once last year. In third-quarter 2017, Waters Corp. continued its impressive streak, as the company’s adjusted earnings of $1.77 per share trumped the Zacks Consensus Estimate of $1.74 by 1.7%.
The bottom-line figure fared much better in year-over-year comparison, reflecting striking growth of 12.7% from the prior-year quarter tally of $1.57. Remarkable broad-based top-line expansion, along with spectacular growth in Europe, 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 7% year over year to $566 million and also came ahead of the Zacks Consensus Estimate of $552.6 million.
The upside in the top line came on the back of robust performance in the industrial end markets (up 6% year over year) and the bio/pharmaceutical end market (up 7% year over year). The momentum was further backed by 15% growth 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 climbed 8% and 6%, respectively, driving top-line growth.
In terms of geographies, Waters Corp. witnessed strong sales in Asia and Europe, which posted 7% and 20% growth, respectively. However, sales in the Americas continued to reflect weakness and remained flat year over year.
Total selling and administrative expenses in the quarter came in at $135.2 million, up from $123.9 million incurred in third-quarter 2016. Research and development outlay for the quarter was $33.8 million compared with $30.4 million incurred a year ago.
Despite the rise in these expenses, operating income in the quarter climbed 4.8% year over year to $159 million.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corp.’s cash, cash equivalents and investments at the quarter end amounted to $3.3 billion, higher than the $2.81 billion recorded as on Dec 31, 2016. The company’s total liabilities at quarter end increased to about $2.53 billion from $2.36 billion as on Dec 31, 2016.
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 sturdy revenue driver for the past few quarters. The company’s bright pharmaceutical business started 2017 on a healthy note and looks set to continue its momentum, going ahead. It is also seeing encouraging trends in its industrial businesses. The governmental and academic markets have also turned its performance around and look poised to maintain the growth trend, in the coming quarters.
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. Additionally, 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 in the near future.
Zacks Rank & Other Stocks to Consider
Waters Corp. currently holds a Zacks Rank #2 (Buy).
Other top-ranked stocks in the broader sector include MAM Software Group, Inc. , DXC Technology Company (DXC - Free Report) and Mettler-Toledo International, Inc. (MTD - Free Report) . While MAM Software and DXC Technology sport a Zacks Rank #1 (Strong Buy), Mettler-Toledo holds the same rank as Waters Corp. You can see the complete list of today’s Zacks #1 Rank stocks here.
MAM Software has an outstanding positive average earnings surprise of 104.2% for the trailing four quarters, beating estimates thrice.
DXC Technology also has a robust earnings surprise history, with an average beat of 25.7% for the trailing four quarters, beating estimates each time.
Mettler-Toledo has a striking earnings surprise history for the last four quarters, having beaten estimates all through, for an average beat of 5.3%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Waters (WAT) Q2 Earnings Beat on Broad-Based Sales Growth
Waters Corporation (WAT - Free Report) has a brilliant earnings beat streak, spanning 12 quarters of positive earnings surprises, which the company broke just once as it reported in-line earnings once last year. In third-quarter 2017, Waters Corp. continued its impressive streak, as the company’s adjusted earnings of $1.77 per share trumped the Zacks Consensus Estimate of $1.74 by 1.7%.
The bottom-line figure fared much better in year-over-year comparison, reflecting striking growth of 12.7% from the prior-year quarter tally of $1.57. Remarkable broad-based top-line expansion, along with spectacular growth in Europe, 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 7% year over year to $566 million and also came ahead of the Zacks Consensus Estimate of $552.6 million.
The upside in the top line came on the back of robust performance in the industrial end markets (up 6% year over year) and the bio/pharmaceutical end market (up 7% year over year). The momentum was further backed by 15% growth 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 climbed 8% and 6%, respectively, driving top-line growth.
In terms of geographies, Waters Corp. witnessed strong sales in Asia and Europe, which posted 7% and 20% growth, respectively. However, sales in the Americas continued to reflect weakness and remained flat year over year.
Total selling and administrative expenses in the quarter came in at $135.2 million, up from $123.9 million incurred in third-quarter 2016. Research and development outlay for the quarter was $33.8 million compared with $30.4 million incurred a year ago.
Despite the rise in these expenses, operating income in the quarter climbed 4.8% year over year to $159 million.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corporation Price, Consensus and EPS Surprise | Waters Corporation Quote
Liquidity
Waters Corp.’s cash, cash equivalents and investments at the quarter end amounted to $3.3 billion, higher than the $2.81 billion recorded as on Dec 31, 2016. The company’s total liabilities at quarter end increased to about $2.53 billion from $2.36 billion as on Dec 31, 2016.
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 sturdy revenue driver for the past few quarters. The company’s bright pharmaceutical business started 2017 on a healthy note and looks set to continue its momentum, going ahead. It is also seeing encouraging trends in its industrial businesses. The governmental and academic markets have also turned its performance around and look poised to maintain the growth trend, in the coming quarters.
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. Additionally, 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 in the near future.
Zacks Rank & Other Stocks to Consider
Waters Corp. currently holds a Zacks Rank #2 (Buy).
Other top-ranked stocks in the broader sector include MAM Software Group, Inc. , DXC Technology Company (DXC - Free Report) and Mettler-Toledo International, Inc. (MTD - Free Report) . While MAM Software and DXC Technology sport a Zacks Rank #1 (Strong Buy), Mettler-Toledo holds the same rank as Waters Corp. You can see the complete list of today’s Zacks #1 Rank stocks here.
MAM Software has an outstanding positive average earnings surprise of 104.2% for the trailing four quarters, beating estimates thrice.
DXC Technology also has a robust earnings surprise history, with an average beat of 25.7% for the trailing four quarters, beating estimates each time.
Mettler-Toledo has a striking earnings surprise history for the last four quarters, having beaten estimates all through, for an average beat of 5.3%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>