It has been about a month since the last earnings report for AmerisourceBergen . Shares have added about 2.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AmerisourceBergen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AmerisourceBergen Q3 Earnings and Revenues Top Estimates
AmerisourceBergen Corporation reported third-quarter fiscal 2021 adjusted earnings per share of $2.16 surpassing the Zacks Consensus Estimate of $2.01 by 7.5%. The bottom line improved 16.8% year over year.
The better-than-expected bottom-line performance can be attributed to higher adjusted operating income. However, increase interest expense, higher diluted share count and effective tax rate partially offset the improvement.
GAAP earnings per share in the quarter under review was $1.40, down 0.7% from the year-ago quarter.
Revenue Details
Revenues increased 17.7% to $53.41 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 3.6%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $49.31 billion, reflecting an increase of 13.2% on a year-over-year basis on the back of increase in specialty product sales, including COVID-19 treatments coupled with overall market growth.
Segmental operating income was $483.9 million, up 13.4% year over year. Solid performance across the company’s distribution businesses, which include higher sales of specialty products, contributed to the upside.
Other Segment
This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.
Revenues at this segment were $4.13 billion, up 128% year over year. The upside was driven by growth across all three operating segments and the acquisition of Alliance Healthcare.
Operating income in the segment was $146.9 million in the quarter, up 77.2% year over year primarily due to buyout of Alliance Healthcare as well as growth in World Courier and MWI.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.63 billion, up 32% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 3.1% in the quarter, up 40 basis points (bps) a year-over-year basis.
The company reported adjusted operating income of $630.6 million, up 24.3% year over year. As a percentage of revenues, adjusted operating margin was 1.2% in the quarter, which expanded 10 bps from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents worth $2.55 billion compared with $6.64 billion on a sequential basis.
Cumulative net cash used in operating activities at the end of the fiscal third quarter totaled $1.66 billion compared with $907.8 million in the prior-year quarter.
Fiscal 2021 Guidance Updated
AmerisourceBergen has updated its fiscal 2021 outlook, highlighting sustained solid performance across its businesses.
Adjusted earnings per share is now estimated to be $9.15-$9.30 (up from the prior-guided range of $8.90-$9.10). The Zacks Consensus Estimate currently stands at $8.96.
The company continues to estimate revenue growth in the high-single-digit percent range.
Adjusted operating income is now projected to be around $2.6 billion (up from the high-single-digit percent range).
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in low-double digit percentage (up from the previous estimate of high-single-digit percent range).
For the Other segment, the metric is estimated to grow in the range of $610 million to $620 million (up from the prior projection of low-double digit percent range).
Adjusted free cash flow is estimated to be around $1.7 billion (up from the prior estimate of $1.5 billion).
The company anticipates adjusted effective tax rate to be 21-22%.
Adjusted operating expenses is projected to be around $3.9 billion (up from growth in the high-single digit percent range).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 6.08% due to these changes.
VGM Scores
At this time, AmerisourceBergen has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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.
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Why Is AmerisourceBergen (ABC) Up 2.5% Since Last Earnings Report?
It has been about a month since the last earnings report for AmerisourceBergen . Shares have added about 2.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AmerisourceBergen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AmerisourceBergen Q3 Earnings and Revenues Top Estimates
AmerisourceBergen Corporation reported third-quarter fiscal 2021 adjusted earnings per share of $2.16 surpassing the Zacks Consensus Estimate of $2.01 by 7.5%. The bottom line improved 16.8% year over year.
The better-than-expected bottom-line performance can be attributed to higher adjusted operating income. However, increase interest expense, higher diluted share count and effective tax rate partially offset the improvement.
GAAP earnings per share in the quarter under review was $1.40, down 0.7% from the year-ago quarter.
Revenue Details
Revenues increased 17.7% to $53.41 billion in the reported quarter. The top line beat the Zacks Consensus Estimate by 3.6%.
Segmental Analysis
Pharmaceutical Distribution Segment
Revenues at this segment totaled $49.31 billion, reflecting an increase of 13.2% on a year-over-year basis on the back of increase in specialty product sales, including COVID-19 treatments coupled with overall market growth.
Segmental operating income was $483.9 million, up 13.4% year over year. Solid performance across the company’s distribution businesses, which include higher sales of specialty products, contributed to the upside.
Other Segment
This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply.
Revenues at this segment were $4.13 billion, up 128% year over year. The upside was driven by growth across all three operating segments and the acquisition of Alliance Healthcare.
Operating income in the segment was $146.9 million in the quarter, up 77.2% year over year primarily due to buyout of Alliance Healthcare as well as growth in World Courier and MWI.
Margin Analysis
In the quarter under review, AmerisourceBergen reported adjusted gross profit of $1.63 billion, up 32% on a year-over-year basis. As a percentage of revenues, adjusted gross margin was 3.1% in the quarter, up 40 basis points (bps) a year-over-year basis.
The company reported adjusted operating income of $630.6 million, up 24.3% year over year. As a percentage of revenues, adjusted operating margin was 1.2% in the quarter, which expanded 10 bps from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents worth $2.55 billion compared with $6.64 billion on a sequential basis.
Cumulative net cash used in operating activities at the end of the fiscal third quarter totaled $1.66 billion compared with $907.8 million in the prior-year quarter.
Fiscal 2021 Guidance Updated
AmerisourceBergen has updated its fiscal 2021 outlook, highlighting sustained solid performance across its businesses.
Adjusted earnings per share is now estimated to be $9.15-$9.30 (up from the prior-guided range of $8.90-$9.10). The Zacks Consensus Estimate currently stands at $8.96.
The company continues to estimate revenue growth in the high-single-digit percent range.
Adjusted operating income is now projected to be around $2.6 billion (up from the high-single-digit percent range).
Operating income at Pharmaceutical Distribution Services segment is now anticipated to improve in low-double digit percentage (up from the previous estimate of high-single-digit percent range).
For the Other segment, the metric is estimated to grow in the range of $610 million to $620 million (up from the prior projection of low-double digit percent range).
Adjusted free cash flow is estimated to be around $1.7 billion (up from the prior estimate of $1.5 billion).
The company anticipates adjusted effective tax rate to be 21-22%.
Adjusted operating expenses is projected to be around $3.9 billion (up from growth in the high-single digit percent range).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 6.08% due to these changes.
VGM Scores
At this time, AmerisourceBergen has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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.