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Why Is Catalent (CTLT) Up 2.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Catalent (CTLT - Free Report) . Shares have added about 2.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Catalent 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 drivers.

Catalent Q4 Earnings Top Estimates, Margins Rise

Catalent reported fourth-quarter fiscal 2021 adjusted earnings per share of $1.16, up 28.9% year over year. The bottom line exceeded the Zacks Consensus Estimate by 11.5%.

The adjustments include charges and benefits related to amortization, financing-related expenses, and acquisition, integration and other special items costs, to name a few.

The company’s GAAP earnings per share was 97 cents in the quarter, up 14.1% year over year.

Full-year adjusted earnings per share was $3.04, reflecting a 44.1% increase from the year-ago period. Again, the metric surpassed the Zacks Consensus Estimate by 3.4%.

Revenues in Detail

Revenues grossed $1.19 billion in the reported quarter, up 25.4% year over year (up 22% at constant exchange rate or CER). The metric again surpassed the Zacks Consensus Estimate by 5.4%.

The top line was driven by robust segmental performances in the reported quarter.

Organic net revenues (excluding the impact of acquisitions and divestitures) increased 26% year over year at CER.

Full-year revenues were $3.99 billion, up 29.2% year over year (up 26% at CER). The metric surpassed the Zacks Consensus Estimate by 1.5%.

Segments in Detail

Revenues at the Biologics segment rose 68.9% year over year (up 66% at CER) to $603 million in the quarter under review. Excluding the impact of acquisitions, net revenues increased by 66%.

Revenues at the Softgel and Oral Technologies segment improved 3.4% from the year-ago period (down 1% at CER) to $301 million.

The Oral and Specialty Delivery arm recorded revenues of $186 million, down 15.1% and 19% on a reported basis and at CER, respectively, year over year. Further, net revenues decreased 4% on excluding the impact of acquisitions and divestitures.

Revenues at the Clinical Supply Services business rose 25% year over year (up 21% at CER) to $105 million.

Operational Update

In the quarter under review, Catalent’s gross profit improved 31.4% to $439 million. Gross margin expanded 168 basis points (bps) to 36.9%.

Meanwhile, selling, general and administrative expenses rose 17.2% to $184 million year over year.

Adjusted operating profit totaled $255 million, rising 44.1% from the prior-year quarter. Adjusted operating margin in the quarter expanded by 277 bps to 21.5%.

Financial Update

Catalent ended fiscal 2021 with cash and cash equivalents of $896 million compared with $953 million at the end of fiscal 2020. Total debt at the end of fiscal 2021 was $3.24 billion compared with $3.02 billion at the end of fiscal 2020.

Cumulative net cash provided by operating activities at the end of fiscal 2021 was $433 million compared with $440 million a year ago.

FY22 Guidance

Catalent has initiated the financial guidance for fiscal 2022.

The company projects revenues within $4.30-$4.50 billion for the full year. The Zacks Consensus Estimate for fiscal 2022 revenues is currently pegged at $4.32 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -20.75% due to these changes.

VGM Scores

At this time, Catalent 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 second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Catalent has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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