A month has gone by since the last earnings report for Masimo (MASI Quick QuoteMASI - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Masimo 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.

Masimo’s Q3 Earnings Surpass Estimates, '21 View Up

Masimo delivered adjusted earnings per share of 94 cents in the third quarter of 2021, up 17.5% year over year. The figure surpassed the Zacks Consensus Estimate by 3.3%.

The adjustments include acquisition, integration and related costs, and litigation-related expenses, settlements and awards, among others.

GAAP earnings per share for the quarter was $1.00, up by 17.6% from the year-earlier figure.

Revenues in Detail

Masimo registered revenues of $307.4 million in the third quarter, up 10.5% year over year on a reported basis. The figure also surpassed the Zacks Consensus Estimate by 3.9%.

At constant exchange rate (CER), revenues grew by 10.1%.

Per management, shipments of non-invasive technology boards and instruments, excluding handheld and fingertip pulse oximeters, were 74,600 in the third quarter of 2021. The company also recorded a 27% increase in single-patient-use sensor sales volume.

Margin Analysis

In the quarter under review, Masimo’s gross profit rose 13.8% to $203.7 million. Gross margin expanded 191 basis points (bps) to 66.3%.

Selling, general & administrative expenses climbed 11.4% to $100.6 million. Research and development expenses went up 22.7% year over year to $35.4 million. Adjusted operating expenses of $136.1 million increased 14.1% year over year.

Adjusted operating profit totaled $67.6 million, reflecting a 13.3% uptick from the prior-year quarter. Adjusted operating margin in the third quarter expanded by 53 bps to 21.9%.

Financial Position

Masimo exited the third quarter of 2021 with cash and cash equivalents of $652.4 million compared with $575.9 million at the end of the second quarter.

Cumulative net cash flow from operating activities at the end of the third quarter was $167.2 million compared with $146.5 million a year ago.

Masimo repurchased $128.9 million worth of common stock at the end of the third quarter compared with $591 million worth of common stock a year ago.

2021 Guidance

Masimo has updated its earlier-provided full-year 2021 financial outlook.

Total revenues are now projected at $1,230 million, reflecting reported growth of 7.5% and CER growth of 6.8%. This is up from the previous view of $1,216 million, which reflected an uptick of 6.3% and 5.4% on a reported and CER basis, respectively. The Zacks Consensus Estimate for the metric is currently pegged at $1.22 billion.

Adjusted earnings per share is projected at $3.88, up from the previous outlook of $3.85. The Zacks Consensus Estimate for the same is pegged at $3.85.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Masimo has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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

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