Back to top

Image: Bigstock

NEOGEN (NEOG) Q1 Earnings and Revenues Surpass Estimates

Read MoreHide Full Article

NEOGEN Corporation’s (NEOG - Free Report) first-quarter fiscal 2021 earnings per share (EPS) of 30 cents exceeded the year-ago figure of 28 cents per share by 7.1%. It also outpaced the Zacks Consensus Estimate by 11.1%.

Revenues for the fiscal first quarter improved 7.8% on a year-over-year basis to $109.3 million despite the ongoing difficult global business environment. Revenues also surpassed the Zacks Consensus Estimate by 5.1%.

Segments in Detail

For the quarter, the company registered Food Safety revenues of $54.2 million, reflecting a 6.2% year-over-year growth due to higher sales of disinfectants, hand sanitizers and insecticides at NEOGEN’s international locations. The segment also benefited from the company’s latest Soleris NG automated microbial system that was launched in July. Robust customer acceptance of NEOGEN’s Listeria Right Now system led to 9% sales growth of the system from the year-ago quarter.

NEOGEN’s revenues for the Food Safety segment from the U.K. rose 21% in U.S. dollars due to strong sales of hand sanitizers, cleaners and disinfectants. The segment’s revenues from China more than doubled due to gains in sales across the group’s entire product portfolio, particularly biosecurity products, due to the country’s continuous fight against the COVID-19 pandemic and African swine fever. Segment revenues from India increased 10% in U.S. dollars. However, its revenues from Brazil reflected only 1% growth in U.S. dollars despite strong revenues in local currencies due to currency translations. Segment revenues from Mexico were down 2% in U.S. dollars despite strong revenues in local currencies.

Neogen Corporation Price, Consensus and EPS Surprise

Neogen Corporation Price, Consensus and EPS Surprise

Neogen Corporation price-consensus-eps-surprise-chart | Neogen Corporation Quote

Animal Safety revenues for the fiscal first quarter were $55.1 million, reflecting a 9.4% year-over-year increase backed by 47% growth in sales of its rodenticides, a 12% rise in genomics services in North America and Australia, along with a 6% improvement in sales of domestic insecticides. Notably, insecticides revenues included revenues from the Aug 3 acquisition of the U.S. rights to Elanco’s StandGuard Pour-on for horn fly and lice control in beef cattle.

Revenues from NEOGEN’s worldwide animal genomics business increased 11% for the first quarter of fiscal 2021 from the comparable year-ago period. This was primarily due to the company’s accelerating growth in companion animal genetic testing and recent launch of a new genomic test for whiteleg shrimp. However, this was partially offset by lower sales into the commercial dairy and beef markets due to persistently poor economic conditions as well as supply chain issues resulting from the COVID-19 outbreak.

Margin Details

NEOGEN’s fiscal first-quarter gross profit improved 4.4% year over year to $50.3 million. However, gross margin contracted 151 basis points (bps) to 46%.

Sales and marketing expenses fell 5.9% to $16.5 million, whereas administrative expenses rose 2.9% from the prior-year quarter to $11 million. Research & development expenses were $3.9 million, up 5.2% from the year-ago quarter. Operating costs totaled $31.4 million, reflecting a reduction of 1.6% year over year.

For the reported quarter, operating income was $18.9 million, which improved 16.2% from the year-ago period. Operating margin expanded 125 bps to 17.3%.

Cash Position

The company ended fiscal first-quarter 2021 with cash and investments of $367.5 million, reflecting an improvement from $343.7 million at fiscal 2020-end. It had no debt on the balance sheet at quarter-end.

Our Take

NEOGEN exited the fiscal first quarter of 2020 with better-than-expected earnings and revenues. The company’s segmental performance was primarily boosted by enhanced sales of hand sanitizers, cleaners and disinfectants to meet the requirements created by the coronavirus pandemic. NEOGEN’s international performance of both its operating segments was impressive despite the challenging global business climate. Favorable customer response for the company’s Soleris NG system buoys optimism. Expansion of the operating margin looks encouraging.

However, the drop in revenues from Brazil and Mexico due to foreign exchange translations is disappointing. Despite an impressive top line for the fiscal first quarter, the business environment across many of the company’s markets remains sluggish and challenging, which is concerning. The contraction of gross margin is also a downer.

Zacks Rank & Stocks to Consider

NEOGEN currently carries a Zacks Rank #4 (Sell).

The Zacks Consensus Estimate for Quidel Corporation’s (QDEL - Free Report) third-quarter 2020 revenues is pegged at $401 million, indicating a 217% improvement from the year-ago reported figure. The consensus mark for the bottom line is pegged at $4.12 per share, indicating a 488.6% surge from the year-ago reported figure. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BioRad Laboratories, Inc.’s (BIO - Free Report) third-quarter 2020 EPS is pegged at $1.85 per share, suggesting a 14.9% improvement from the year-ago period. The same for revenues is pegged at $565.3 million, suggesting a 0.8% increase from the year-earlier reported figure. The company currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Brainsway Ltd.’s (BWAY - Free Report) bottom line for third-quarter 2020 is pegged at a loss of 6 cents per share, indicating 50% improvement from the year-ago reported loss. The company currently carries a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>