We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Waters (WAT) Down 6% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Waters (WAT - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Waters 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.
Waters' Q1 Earnings & Revenues Beat Estimates
Waters has reported first-quarter 2022 non-GAAP earnings of $2.80 per share, which surpassed the Zacks Consensus Estimate by 20.7%. Further, the bottom line improved 22.3% on a year-over-year basis.
Net sales of $690.6 million beat the Zacks Consensus Estimate of $632.9 million. The figure rose 13% and 16% from the year-ago quarter’s numbers on a reported and constant-currency basis, respectively.
Top-line growth was driven by a solid momentum across pharmaceutical and industrial end markets. Strong performances in Asia, the Americas and Europe contributed well. Strong performances delivered by the Waters and TA segments were other positives.
Top Line in Detail
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: WAT operates two organized segments, Waters and TA.
The Waters segment (88.8% of net sales) generated $613.2 million of sales, up 13% from the year-ago quarter. Sales in the TA segment were $77.4 million (11.2% of net sales), reflecting 16% year-over-year growth.
By Products & Services: The division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (47.1% of sales) were $325.2 million, up 24% on a year-over-year basis.
Service sales (34.7% of the sales) were $239.7 million, increasing 6% year over year.
Chemistry sales (18.2% of the sales) were $125.6 million, up 6% from the year-ago quarter’s level.
Moreover, the service and chemistry segments generated recurring revenues of $365.3 million, up 6% from the year-ago quarter.
By Markets: Waters serves three end markets — Pharmaceutical, Industrial and Governmental & Academic.
The Pharmaceutical market (60.2% of net sales) generated sales of $415.8 million, which increased 15% on a year-over-year basis.
The Industrial market’s (30.3% of sales) sales were $209.4 million, up 14% from the year-ago quarter.
Academic & Government (9.5% of sales) generated $65.4 million of the total sales. The figure increased 0.4% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (37% of net sales) generated $254.3 million of sales, up 11% on a year-over-year basis. Sales in China grew 18% from the prior-year quarter.
The Americas (36% of sales) generated $248.8 million of sales, increasing 26% year over year. Sales in the United States increased 28% year over year.
Europe (27% of sales) generated $187.4 million of sales, up 3% from the prior-year quarter’s level.
Operating Details
In the first quarter, non-GAAP selling and administrative expenses were $155.1 million, reflecting an increase of 8.9% from the year-ago quarter’s level. As a percentage of net sales, the figure contracted 90 basis points (bps) year over year.
Research and development spending was $40.5 million, up 6.2% from the year-ago reported figure. As a percentage of net sales, the figure contracted 30 bps year over year.
The adjusted operating margin was 30.3%, which contracted 170 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Apr 2, 2022 cash, cash equivalents and investments were $503.1 million, lower than $569.3 million as of Dec 31, 2021.
Account receivables stood at $607.3 million at the end of the first quarter, down from $612.6 million in the last reported quarter.
Waters generated cash from operation of $197.9 million in the reported quarter, down from $217.9 million in the prior quarter.
Waters recorded a free cash flow of $175.6 million in the first quarter.
Guidance
For second-quarter 2022, Waters expects non-GAAP earnings of $2.55-$2.65 per share.
Waters anticipates net sales growth of 6-8% on a constant-currency basis.
For 2022, Waters revised the guidance for non-GAAP earnings upward from $11.75-$12.00 per share to $11.90-$12.10 per share.
Waters also increased its guidance for sales growth. It expects 2022 net sales growth of 7.5-9% on a constant-currency basis. Previously, the company anticipated net sales growth of 5-7% on a constant-currency basis
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.46% due to these changes.
VGM Scores
At this time, Waters has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, 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 B. 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, Waters has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Waters (WAT) Down 6% Since Last Earnings Report?
It has been about a month since the last earnings report for Waters (WAT - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Waters 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.
Waters' Q1 Earnings & Revenues Beat Estimates
Waters has reported first-quarter 2022 non-GAAP earnings of $2.80 per share, which surpassed the Zacks Consensus Estimate by 20.7%. Further, the bottom line improved 22.3% on a year-over-year basis.
Net sales of $690.6 million beat the Zacks Consensus Estimate of $632.9 million. The figure rose 13% and 16% from the year-ago quarter’s numbers on a reported and constant-currency basis, respectively.
Top-line growth was driven by a solid momentum across pharmaceutical and industrial end markets. Strong performances in Asia, the Americas and Europe contributed well. Strong performances delivered by the Waters and TA segments were other positives.
Top Line in Detail
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: WAT operates two organized segments, Waters and TA.
The Waters segment (88.8% of net sales) generated $613.2 million of sales, up 13% from the year-ago quarter. Sales in the TA segment were $77.4 million (11.2% of net sales), reflecting 16% year-over-year growth.
By Products & Services: The division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (47.1% of sales) were $325.2 million, up 24% on a year-over-year basis.
Service sales (34.7% of the sales) were $239.7 million, increasing 6% year over year.
Chemistry sales (18.2% of the sales) were $125.6 million, up 6% from the year-ago quarter’s level.
Moreover, the service and chemistry segments generated recurring revenues of $365.3 million, up 6% from the year-ago quarter.
By Markets: Waters serves three end markets — Pharmaceutical, Industrial and Governmental & Academic.
The Pharmaceutical market (60.2% of net sales) generated sales of $415.8 million, which increased 15% on a year-over-year basis.
The Industrial market’s (30.3% of sales) sales were $209.4 million, up 14% from the year-ago quarter.
Academic & Government (9.5% of sales) generated $65.4 million of the total sales. The figure increased 0.4% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (37% of net sales) generated $254.3 million of sales, up 11% on a year-over-year basis. Sales in China grew 18% from the prior-year quarter.
The Americas (36% of sales) generated $248.8 million of sales, increasing 26% year over year. Sales in the United States increased 28% year over year.
Europe (27% of sales) generated $187.4 million of sales, up 3% from the prior-year quarter’s level.
Operating Details
In the first quarter, non-GAAP selling and administrative expenses were $155.1 million, reflecting an increase of 8.9% from the year-ago quarter’s level. As a percentage of net sales, the figure contracted 90 basis points (bps) year over year.
Research and development spending was $40.5 million, up 6.2% from the year-ago reported figure. As a percentage of net sales, the figure contracted 30 bps year over year.
The adjusted operating margin was 30.3%, which contracted 170 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Apr 2, 2022 cash, cash equivalents and investments were $503.1 million, lower than $569.3 million as of Dec 31, 2021.
Account receivables stood at $607.3 million at the end of the first quarter, down from $612.6 million in the last reported quarter.
Waters generated cash from operation of $197.9 million in the reported quarter, down from $217.9 million in the prior quarter.
Waters recorded a free cash flow of $175.6 million in the first quarter.
Guidance
For second-quarter 2022, Waters expects non-GAAP earnings of $2.55-$2.65 per share.
Waters anticipates net sales growth of 6-8% on a constant-currency basis.
For 2022, Waters revised the guidance for non-GAAP earnings upward from $11.75-$12.00 per share to $11.90-$12.10 per share.
Waters also increased its guidance for sales growth. It expects 2022 net sales growth of 7.5-9% on a constant-currency basis. Previously, the company anticipated net sales growth of 5-7% on a constant-currency basis
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.46% due to these changes.
VGM Scores
At this time, Waters has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, 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 B. 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, Waters has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.