Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

MWI Veterinary Supply (MWIV - Analyst Report) reported second-quarter fiscal 2013 earnings per share (EPS) of $1.19, up 4.4% on a year-over-year basis. The result also surpassed the Zacks Consensus Estimate of $1.17, representing the sixth successive quarterly earnings beat for MWI Vet. 

Second-Quarter Review
 
Revenues increased 11% year over year to $563.1 million in the second quarter. Despite challenging conditions in end markets, MWI Vet posted double-digit revenue growth. Moreover, initial results from the diagnostic line are also encouraging. However, the result was well behind the Zacks Consensus Estimate of $571 million.
 
Revenue growth in the U.S. was 10.7% on a year-over-year basis with about 9% organic growth. In the U.S., Internet sales to independent veterinary practices and producers rose 22% year over year. U.K. witnessed revenue growth of 13.2%, based on organic revenue growth of 14.4% in the region and unfavorable foreign exchange impact of 1.2%. 
 
Commissions increased 16.2% year over year to $5.1 million on the back of external incentives. Vendor rebates surged $991,000 from the year-ago period on the heels of revenue growth and timing of manufacturing programs. 
 
Gross profit improved 12.1% to $74.7 million in the quarter. As a result, gross margin expanded 20 basis points (bps) year over year to 13.3% in the quarter due to higher vendor rebates. 
 
Despite the absolute increase in SG&A expenses due to the addition of Micro, it remained flat as a percentage of sales at 8.5% in the quarter. However, MWI Vet’s operating income climbed 13.2% to $24.2 million. As a result, operating margin expanded 10 bps to 4.3% in the reported quarter.
 
MWI Vet exited the second quarter with cash balance of $452,000 compared with $514,000 at the end of fiscal 2012. 
 
As of Mar 31, 2013, the company had $64 million on its credit facilities compared with $48.1 million as of Sep 30, 2012. The increase was primarily due to the acquisition of PCI Animal Health in the first quarter.
 
Outlook Tweaked
 
Following a strong second quarter, MWI Vet revised its guidance for fiscal 2013. The company now expects to report revenues of $2.32–$2.36 billion compared with the prior outlook of $2.31–$2.36 billion. The updated outlook reflects annualized growth of 11.8% to 13.7%. The current Zacks Consensus Estimate of $2.37 billion lies outside the guidance range.
 
MWI Vet presently envisages EPS in the range of $4.79–$4.89 compared with $4.73–$4.87 earlier, with annualized growth of 13.2%−15.6% for the ongoing fiscal. The current Zacks Consensus Estimate of $4.86 is within the company’s guidance range.  
 
Our Take
 
Even amid a low-growth environment, MWI Vet continues to post double-digit growth as reflected in its second quarter earnings, which surpassed the Zacks Consensus Estimate. However, the challenging scenario in the animal health market led to a sequential slowdown in revenues which missed our projections. 
 
Nonetheless, margin expansion and higher vendor rebates are material upsides in the reported quarter. Evidently, MWI Vet has the strength to deliver consistent growth performance going forward.
 
Currently, the stock carries a Zacks Rank #2 (Buy). Other Zacks Rank #2 healthcare stocks are The Cooper Companies (COO - Analyst Report), Accuray Inc. (ARAY - Analyst Report) and Abiomed Inc. (ABMD - Analyst Report). 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%