It has been about a month since the last earnings report for AmerisourceBergen . Shares have lost about 2.3% 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 catalysts.
AmerisourceBergen Q4 Earnings & Revenues Top Estimates
AmerisourceBergen Corporation reported fourth-quarter fiscal 2020 adjusted earnings per share of $1.89 surpassing the Zacks Consensus Estimate of $1.87 by 1.1%. The bottom line also improved 17.4% year over year.
The better-than-expected bottom-line performance can be attributed to higher adjusted operating income and reduced share count.
For fiscal 2020, the company reported adjusted EPS of $7.90, which outpaced the Zacks Consensus Estimate by 0.3%. The figure increased 11.4% from the year-ago period.
Revenue Details
Revenues increased 7.9% to $49.24 billion in the reported quarter. Further, the top line beat the Zacks Consensus Estimate by 2.4%.
For fiscal 2020, the company’s revenues were $189.89 billion, up 5.7% from the year-ago period. The metric also beat the consensus mark by 0.6%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $47.29 billion, reflecting an increase of 7.8% on a year-over-year basis on the back of higher volume related to growth of some of its largest customers and continued strength in specialty product sales.
Segmental operating income was $425.6 million, up 15.2% year over year. Increase in gross profit, exit of the PharMEDium compounding business and slight expense growth contributed to the upside.
Other Segment
This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.
Revenues at this segment were $1.99 billion, up 10.8% year over year. The upside was driven by growth across all three operating segments.
Operating income in the segment was $104.5 million in the quarter, up 20.5% year over year primarily due to growth in World Courier.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.33 billion, up 6.4% 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 $529.9 million, up 16.2% year over year. As a percentage of revenues, adjusted operating margin was 1.1% in the quarter, which remained flat year over year.
Fiscal 2021 Guidance
AmerisourceBergen provided fiscal 2021 outlook, indicating growth in both Pharmaceutical Distribution Services and businesses committed toward Global Commercialization Services & Animal Health.
Adjusted EPS is now estimated to be $8.20-$8.45. The Zacks Consensus Estimate is currently pegged at $8.40.
The company estimates revenue growth in the mid-single-digit percent range.
Adjusted operating income is now projected to grow in the mid-single digit percent range.
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in the mid-single-digit percent range.
For the Other segment the metric is estimated to grow in the mid-single-digit percent range.
Adjusted free cash flow is estimated to be around $1.5 billion.
The company anticipates adjusted effective tax rate to be 21-22%.
Adjusted operating expenses is projected to increase in the mid-single-digit percent range.
Further, the company now anticipates weighted average diluted shares between 206 million and 207 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, AmerisourceBergen has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 broadly 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.
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AmerisourceBergen (ABC) Down 2.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for AmerisourceBergen . Shares have lost about 2.3% 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 catalysts.
AmerisourceBergen Q4 Earnings & Revenues Top Estimates
AmerisourceBergen Corporation reported fourth-quarter fiscal 2020 adjusted earnings per share of $1.89 surpassing the Zacks Consensus Estimate of $1.87 by 1.1%. The bottom line also improved 17.4% year over year.
The better-than-expected bottom-line performance can be attributed to higher adjusted operating income and reduced share count.
For fiscal 2020, the company reported adjusted EPS of $7.90, which outpaced the Zacks Consensus Estimate by 0.3%. The figure increased 11.4% from the year-ago period.
Revenue Details
Revenues increased 7.9% to $49.24 billion in the reported quarter. Further, the top line beat the Zacks Consensus Estimate by 2.4%.
For fiscal 2020, the company’s revenues were $189.89 billion, up 5.7% from the year-ago period. The metric also beat the consensus mark by 0.6%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $47.29 billion, reflecting an increase of 7.8% on a year-over-year basis on the back of higher volume related to growth of some of its largest customers and continued strength in specialty product sales.
Segmental operating income was $425.6 million, up 15.2% year over year. Increase in gross profit, exit of the PharMEDium compounding business and slight expense growth contributed to the upside.
Other Segment
This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.
Revenues at this segment were $1.99 billion, up 10.8% year over year. The upside was driven by growth across all three operating segments.
Operating income in the segment was $104.5 million in the quarter, up 20.5% year over year primarily due to growth in World Courier.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.33 billion, up 6.4% 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 $529.9 million, up 16.2% year over year. As a percentage of revenues, adjusted operating margin was 1.1% in the quarter, which remained flat year over year.
Fiscal 2021 Guidance
AmerisourceBergen provided fiscal 2021 outlook, indicating growth in both Pharmaceutical Distribution Services and businesses committed toward Global Commercialization Services & Animal Health.
Adjusted EPS is now estimated to be $8.20-$8.45. The Zacks Consensus Estimate is currently pegged at $8.40.
The company estimates revenue growth in the mid-single-digit percent range.
Adjusted operating income is now projected to grow in the mid-single digit percent range.
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in the mid-single-digit percent range.
For the Other segment the metric is estimated to grow in the mid-single-digit percent range.
Adjusted free cash flow is estimated to be around $1.5 billion.
The company anticipates adjusted effective tax rate to be 21-22%.
Adjusted operating expenses is projected to increase in the mid-single-digit percent range.
Further, the company now anticipates weighted average diluted shares between 206 million and 207 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, AmerisourceBergen has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 broadly 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.