is a Zacks #1 Rank (Strong Buy) after posting six consecutive positive earnings
surprises and recent accelerating earnings momentum.
Pharmerica Corporation operates as an institutional pharmacy services company in the United States. It offers services to healthcare facilities and provides management pharmacy services to hospitals. Pharmerica Corporation operates approximately 95 institutional pharmacies in 44 states and provides pharmacy management services to 91 hospitals. The company is headquartered in Louisville, Kentucky.
PMC Exhibits Earnings Momentum
PMC has six consecutive positive earnings surprises. The
company reported earnings of $0.31 for the September 2011 quarter,
$0.11 or 55% higher than expectations. The December 2011 quarter
saw earnings of $0.35, $0.14 ahead of the Zacks Consensus Estimate
for a 66% earnings beat.
The year before saw the company beat estimates, but it lacked the
dramatic increase in momentum that we saw in 2011. A beat of 10% in the
September 2010 quarter was followed up by a beat of 17% in
December 2010. The real difference was that EPS in September 2010 was $0.21, one penny more than the actual earnings in the December 2010 quarter.
PMC Recently Reported Earnings
On February 9, 2012 the company reported revenue of $496 million
roughly $4 million less than the Zacks Consensus Estimate but
higher than the $492 million reported in the year ago period. EPS
of $0.35 was $0.14 ahead of the Zacks Consensus estimate and
higher than the $0.20 reported in the year ago period.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up
their earnings estimates for 2012. The Zacks Consensus Estimate
for 2012 EPS moved from $1.10 in January 2012 to the current
level of $1.18.
PMC trades at very, very reasonable multiples. At 10x both trailing and forward PE, the company trades at a discount to the industry average for both multiples. The price to book multiple of 0.9x is well below the 2.4x industry average and the price to sales metric is also far below the industry average.
Looking at the chart we see the stock has found some base line support that has been tested three times. The support line can be drawn in at the lows reached in early February, retested in early March and again in late March. A break out for this stock will be driven by real revenue growth and could get this stock back to previous highs, which are 33% above current levels. PMC is a Zacks #1 Rank (Strong
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor