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Why Is Charles River (CRL) Down 3.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Charles River Laboratories (CRL - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Charles River due for a breakout? 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.
Charles River Q4 Earnings Beat Estimates, EPS View Up
Charles River Laboratories announced adjusted earnings per share of $2.49 for fourth-quarter 2021, reflecting a 4.2% improvement from the year-ago earnings. The metric surpassed the Zacks Consensus Estimate by 2.9%.
On a GAAP basis, earnings declined 4.9% year over year to $2.67.
Full-year adjusted earnings per share was $10.32, a 26.9% jump from the year-ago period and 0.7% ahead of the Zacks Consensus Estimate. The full-year adjusted figure also exceeded the company’s guidance range of $10.20-$10.30.
Revenues
Revenues in the fourth quarter totaled $905.1 million, beating the Zacks Consensus Estimate by 1.5%. Moreover, the top line improved 14.4% from the year-ago number (up 10.5% organically, excluding the impact of acquisition and foreign currency translation).
The comparison to the COVID-related impact in 2020 increased both the reported and organic revenue growth rates by 0.5% in fourth-quarter 2021.
For 2021, the company reported revenues of $3.54 billion, up 21.1% from 2020 (up 15.1% organically). The full-year figure edged past the Zacks Consensus Estimate of $3.53 billion and also exceeded the company’s reported and organic revenue growth guidance range of 19.5-20.5% and 13.5-14.5%, respectively.
Segment in Detail
Charles River’s fourth-quarter total Research Models and Services (RMS) revenues of $165.6 million reflected an increase of 5.7% year over year (up 13.3% organically). Organic revenue growth was driven by the robust demand for research models, particularly in China, as well as higher revenues from research model services. However, the Q4 results for the cell supply business, which consists of HemaCare and Cellero, continued to be impacted by donor access and availability.
Discovery and Safety Assessment (DSA) revenues of $534.1 million rose 7.9% (up 6.7% organically). Organic revenue growth was mainly driven by strong contributions from Discovery Services and Safety Assessment businesses.
Manufacturing Solutions revenues totaled $205.3 million, up 47.4% year over year (up 21.2% organically). Organic revenue growth was fueled by strong demand for the Biologics Testing Solutions, Microbial Solutions, and Avian Vaccine businesses.
Margins
The gross profit in the reported quarter was $347.1 million, up 15.7% from the prior-year quarter. The gross margin of 38.4% expanded 43 basis points (bps).
Meanwhile, selling, general & administrative expenses edged up 0.8% to $144.1 million.
Adjusted operating income totaled $203 million, reflecting a 29.3% jump from the prior-year quarter. The adjusted operating margin in the fourth quarter expanded 259 bps to 22.4%.
Liquidity and Cash Position
Charles River exited 2021 with cash and cash equivalents of $241.2 million compared with $228.4 million at the end of 2020.
Cumulative net cash provided by operating activities at the end of the fourth quarter was $760.8 million compared with the prior-year quarter’s $546.6 million.
2022 Guidance Reaffirmed
The company reinstated its 2022 guidance (initiated in January 2022).
For 2022, revenues are expected to grow in the band of 13-15% on a reported basis. Organic revenue growth is expected in the range of 12.5-14.5%. The Zacks Consensus Estimate for total revenues is pegged at $3.96 billion, indicating a 12.2% rise from 2021.
Adjusted earnings per share for 2022 is expected in the range of $11.50-$11.75. The current Zacks Consensus Estimate is pegged at 11.54.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Charles River has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Charles River 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 Charles River (CRL) Down 3.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Charles River Laboratories (CRL - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Charles River due for a breakout? 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.
Charles River Q4 Earnings Beat Estimates, EPS View Up
Charles River Laboratories announced adjusted earnings per share of $2.49 for fourth-quarter 2021, reflecting a 4.2% improvement from the year-ago earnings. The metric surpassed the Zacks Consensus Estimate by 2.9%.
On a GAAP basis, earnings declined 4.9% year over year to $2.67.
Full-year adjusted earnings per share was $10.32, a 26.9% jump from the year-ago period and 0.7% ahead of the Zacks Consensus Estimate. The full-year adjusted figure also exceeded the company’s guidance range of $10.20-$10.30.
Revenues
Revenues in the fourth quarter totaled $905.1 million, beating the Zacks Consensus Estimate by 1.5%. Moreover, the top line improved 14.4% from the year-ago number (up 10.5% organically, excluding the impact of acquisition and foreign currency translation).
The comparison to the COVID-related impact in 2020 increased both the reported and organic revenue growth rates by 0.5% in fourth-quarter 2021.
For 2021, the company reported revenues of $3.54 billion, up 21.1% from 2020 (up 15.1% organically). The full-year figure edged past the Zacks Consensus Estimate of $3.53 billion and also exceeded the company’s reported and organic revenue growth guidance range of 19.5-20.5% and 13.5-14.5%, respectively.
Segment in Detail
Charles River’s fourth-quarter total Research Models and Services (RMS) revenues of $165.6 million reflected an increase of 5.7% year over year (up 13.3% organically). Organic revenue growth was driven by the robust demand for research models, particularly in China, as well as higher revenues from research model services. However, the Q4 results for the cell supply business, which consists of HemaCare and Cellero, continued to be impacted by donor access and availability.
Discovery and Safety Assessment (DSA) revenues of $534.1 million rose 7.9% (up 6.7% organically). Organic revenue growth was mainly driven by strong contributions from Discovery Services and Safety Assessment businesses.
Manufacturing Solutions revenues totaled $205.3 million, up 47.4% year over year (up 21.2% organically). Organic revenue growth was fueled by strong demand for the Biologics Testing Solutions, Microbial Solutions, and Avian Vaccine businesses.
Margins
The gross profit in the reported quarter was $347.1 million, up 15.7% from the prior-year quarter. The gross margin of 38.4% expanded 43 basis points (bps).
Meanwhile, selling, general & administrative expenses edged up 0.8% to $144.1 million.
Adjusted operating income totaled $203 million, reflecting a 29.3% jump from the prior-year quarter. The adjusted operating margin in the fourth quarter expanded 259 bps to 22.4%.
Liquidity and Cash Position
Charles River exited 2021 with cash and cash equivalents of $241.2 million compared with $228.4 million at the end of 2020.
Cumulative net cash provided by operating activities at the end of the fourth quarter was $760.8 million compared with the prior-year quarter’s $546.6 million.
2022 Guidance Reaffirmed
The company reinstated its 2022 guidance (initiated in January 2022).
For 2022, revenues are expected to grow in the band of 13-15% on a reported basis. Organic revenue growth is expected in the range of 12.5-14.5%. The Zacks Consensus Estimate for total revenues is pegged at $3.96 billion, indicating a 12.2% rise from 2021.
Adjusted earnings per share for 2022 is expected in the range of $11.50-$11.75. The current Zacks Consensus Estimate is pegged at 11.54.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Charles River has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Charles River has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.