A month has gone by since the last earnings report for AmerisourceBergen . Shares have lost about 4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is AmerisourceBergen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AmerisourceBergen Q3 Earnings & Revenues Top Estimates
AmerisourceBergen Corporation reported third-quarter fiscal 2020 adjusted earnings per share of $1.85 surpassing the Zacks Consensus Estimate of $1.58 by 17.1%. The bottom line also improved 5.1% year over year.
The better-than-expected bottom-line performance can be attributed to lower adjusted effective tax rate and reduced share count.
Revenues increased 0.3% to $45.37 billion in the reported quarter. Further, the top line outpaced the Zacks Consensus Estimate by 1.4%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $43.58 billion, inching up 0.1% on a year-over-year basis. Owing to the onset of the COVID-19 pandemic, many of the company’s customers ramped up their purchases in first-quarter 2020 that led to fewer purchases in the second quarter. This led to marginal improvement in the segment’s revenues.
Segmental operating income was $426.6 million, up 3.6% year over year. Increase in gross profit and decrease in operating expenses drove the upside.
Other Segment
This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.
Revenues at this segment were $1.81 billion, up 4.4% year over year. This upside was driven by growth across two operating segments — ABCS and World Courier.
Operating income in the segment was $82.9 million in the quarter, down 12.9% year over year primarily due to the impact of the pandemic at MWI.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.23 billion, up 0.2% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 2.7% in the quarter, which remained flat on a year-over-year basis.
The company reported adjusted operating income of $507.5 million, up 0.2% year over year. As a percentage of revenues, adjusted operating margin was 1.1% in the quarter, which remained flat from the prior-year quarter.
Fiscal 2020 Guidance Updated
AmerisourceBergen has updated fiscal year 2020 outlook, reflecting its sustained robust performance and strong execution.
Adjusted EPS is now estimated in the range of $7.80-$7.95 (up from the previously guided range of $7.35-$7.65). The Zacks Consensus Estimate is currently pegged at $7.40.
The company estimates revenue growth in the mid-single-digit percent range (up from the previously guided range of low-to-mid-single-digit percent range).
Adjusted operating income is now projected to grow in the mid-to-high-single-digit percent range (up from the previously guided low-to mid-single-digit percent range).
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in the mid-to-high-single-digit percent range (up from the low-to mid-single-digit percent range).
For the Other segment the metric is estimated to grow in the low-single-digit percent range (up from the operating income decline in the low-single-digit percent rage).
Nonetheless, the company has reaffirmed all the other previously communicated aspects of its fiscal 2020 guidance and assumptions, which are as follows:
Adjusted free cash flow is estimated to be around $1.5 billion.
The company anticipates adjusted effective tax rate to be around 21% (down from the prior guided range of 21-22%).
Adjusted operating expenses is projected to increase in the low-single-digit percent range.
Further, the company now anticipates weighted average diluted shares to range between 206 million and 207 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 10.85% due to these changes.
VGM Scores
Currently, AmerisourceBergen has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, AmerisourceBergen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Image: Bigstock
Why Is AmerisourceBergen (ABC) Down 4% Since Last Earnings Report?
A month has gone by since the last earnings report for AmerisourceBergen . Shares have lost about 4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is AmerisourceBergen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AmerisourceBergen Q3 Earnings & Revenues Top Estimates
AmerisourceBergen Corporation reported third-quarter fiscal 2020 adjusted earnings per share of $1.85 surpassing the Zacks Consensus Estimate of $1.58 by 17.1%. The bottom line also improved 5.1% year over year.
The better-than-expected bottom-line performance can be attributed to lower adjusted effective tax rate and reduced share count.
Revenues increased 0.3% to $45.37 billion in the reported quarter. Further, the top line outpaced the Zacks Consensus Estimate by 1.4%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $43.58 billion, inching up 0.1% on a year-over-year basis. Owing to the onset of the COVID-19 pandemic, many of the company’s customers ramped up their purchases in first-quarter 2020 that led to fewer purchases in the second quarter. This led to marginal improvement in the segment’s revenues.
Segmental operating income was $426.6 million, up 3.6% year over year. Increase in gross profit and decrease in operating expenses drove the upside.
Other Segment
This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.
Revenues at this segment were $1.81 billion, up 4.4% year over year. This upside was driven by growth across two operating segments — ABCS and World Courier.
Operating income in the segment was $82.9 million in the quarter, down 12.9% year over year primarily due to the impact of the pandemic at MWI.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.23 billion, up 0.2% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 2.7% in the quarter, which remained flat on a year-over-year basis.
The company reported adjusted operating income of $507.5 million, up 0.2% year over year. As a percentage of revenues, adjusted operating margin was 1.1% in the quarter, which remained flat from the prior-year quarter.
Fiscal 2020 Guidance Updated
AmerisourceBergen has updated fiscal year 2020 outlook, reflecting its sustained robust performance and strong execution.
Adjusted EPS is now estimated in the range of $7.80-$7.95 (up from the previously guided range of $7.35-$7.65). The Zacks Consensus Estimate is currently pegged at $7.40.
The company estimates revenue growth in the mid-single-digit percent range (up from the previously guided range of low-to-mid-single-digit percent range).
Adjusted operating income is now projected to grow in the mid-to-high-single-digit percent range (up from the previously guided low-to mid-single-digit percent range).
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in the mid-to-high-single-digit percent range (up from the low-to mid-single-digit percent range).
For the Other segment the metric is estimated to grow in the low-single-digit percent range (up from the operating income decline in the low-single-digit percent rage).
Nonetheless, the company has reaffirmed all the other previously communicated aspects of its fiscal 2020 guidance and assumptions, which are as follows:
Adjusted free cash flow is estimated to be around $1.5 billion.
The company anticipates adjusted effective tax rate to be around 21% (down from the prior guided range of 21-22%).
Adjusted operating expenses is projected to increase in the low-single-digit percent range.
Further, the company now anticipates weighted average diluted shares to range between 206 million and 207 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 10.85% due to these changes.
VGM Scores
Currently, AmerisourceBergen has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, AmerisourceBergen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.