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Envista (NVST) Q2 Earnings & Revenues Miss, Margins Fall
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Envista Holdings Corporation (NVST - Free Report) reported adjusted earnings per share (EPS) of 11 cents for second-quarter 2024, down 74.4% year over year. The bottom line missed the Zacks Consensus Estimate by 59.3%.
The adjustments include a $1.15 billion non-cash charge related to the impairment of goodwill and intangible assets, charges and benefits related to the amortization of acquired intangible assets and restructuring costs, among others.
The company’s GAAP loss was $6.69 compared with the year-ago quarter’s earnings of 29 cents.
Revenues in Detail
Revenues totaled $633.1 million in the reported quarter, down 4.4% year over year. The metric missed the Zacks Consensus Estimate by 2.3%.
Segments in Detail
In the second quarter, Specialty Products & Technologies totaled $415.1 million, down 0.5% year over year.
Revenues from the Equipment & Consumables segment dropped 11.2% year over year to $218 million in the quarter under review.
Operational Update
Gross profit in the reported quarter fell 13.7% year over year to $326.6 million. Gross margin contracted 557 basis points (bps) to 51.6%, reflecting a 4.4% decline in sales and around 8% rise in cost of sales.
Selling, general and administrative expenses were up 10.8% year over year to $302.5 million. Research and development expenses fell 11.9% year over year to $23.6 million.
Operating profit of $48.1 million plummeted 99% year over year. The operating margin contracted 1183 bps to 0.8%.
Envista Holdings Corporation Price, Consensus and EPS Surprise
Envista ended second-quarter 2024 with cash and cash equivalents of $1.04 billion compared with $948.5 million at the end of first-quarter 2024. Long-term debt in the second quarter remained unchanged at $1.39 billion from the end of the first quarter.
Year-to-date net cash provided by operating activities was $133.4 million, surging from $78.2 million a year ago.
2024 Guidance
For 2024, the company expects core sales to decline between 1% and 4 % and adjusted EBITDA margins in the range of 10%-12%. The company also noted that it expects a further decline in the third quarter before returning to growth in the fourth quarter.
The current Zacks Consensus Estimate for revenues is pegged at $2.56 billion for the full year, suggesting a 0.3% decline from the year-ago reported figure.
Our Take
Envista ended second-quarter 2024 on a dismal note, with revenues and earnings missing the respective estimates. The company witnessed a decline in both segments. NVST stated ongoing investments aimed at accelerating growth and improving profitability as reasons for the disappointing performance. Further, the contraction of both margins looks discouraging, too.
According to the company, reported sales growth for Envista’s Spark division slowed in the quarter as it is now deferring a larger portion of case revenues. The company currently recognizes a portion of Spark revenues at the start of a case and the balance over the treatment time. This has impacted the quarter’s sales even when case starts grew above the market in the second quarter.
Diagnostics sales were impacted by the higher interest rate environment. The business contracted in high single digits in the quarter due to the continued impact of exiting some lower priority, more price-sensitive geographic markets.
Zacks Rank and Key Picks
Envista currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has a long-term earnings growth rate of 16.1% for 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2024 earnings of $1.14 per share, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company beat on earnings in each of the trailing four quarters, the average surprise being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2 at present, reported second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion outpaced the Zacks Consensus Estimate by 0.5%.
DGX has a historical five-year earnings growth rate of 7.4% compared with the industry’s 4.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.31%.
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Envista (NVST) Q2 Earnings & Revenues Miss, Margins Fall
Envista Holdings Corporation (NVST - Free Report) reported adjusted earnings per share (EPS) of 11 cents for second-quarter 2024, down 74.4% year over year. The bottom line missed the Zacks Consensus Estimate by 59.3%.
The adjustments include a $1.15 billion non-cash charge related to the impairment of goodwill and intangible assets, charges and benefits related to the amortization of acquired intangible assets and restructuring costs, among others.
The company’s GAAP loss was $6.69 compared with the year-ago quarter’s earnings of 29 cents.
Revenues in Detail
Revenues totaled $633.1 million in the reported quarter, down 4.4% year over year. The metric missed the Zacks Consensus Estimate by 2.3%.
Segments in Detail
In the second quarter, Specialty Products & Technologies totaled $415.1 million, down 0.5% year over year.
Revenues from the Equipment & Consumables segment dropped 11.2% year over year to $218 million in the quarter under review.
Operational Update
Gross profit in the reported quarter fell 13.7% year over year to $326.6 million. Gross margin contracted 557 basis points (bps) to 51.6%, reflecting a 4.4% decline in sales and around 8% rise in cost of sales.
Selling, general and administrative expenses were up 10.8% year over year to $302.5 million. Research and development expenses fell 11.9% year over year to $23.6 million.
Operating profit of $48.1 million plummeted 99% year over year. The operating margin contracted 1183 bps to 0.8%.
Envista Holdings Corporation Price, Consensus and EPS Surprise
Envista Holdings Corporation price-consensus-eps-surprise-chart | Envista Holdings Corporation Quote
Financial Update
Envista ended second-quarter 2024 with cash and cash equivalents of $1.04 billion compared with $948.5 million at the end of first-quarter 2024. Long-term debt in the second quarter remained unchanged at $1.39 billion from the end of the first quarter.
Year-to-date net cash provided by operating activities was $133.4 million, surging from $78.2 million a year ago.
2024 Guidance
For 2024, the company expects core sales to decline between 1% and 4 % and adjusted EBITDA margins in the range of 10%-12%. The company also noted that it expects a further decline in the third quarter before returning to growth in the fourth quarter.
The current Zacks Consensus Estimate for revenues is pegged at $2.56 billion for the full year, suggesting a 0.3% decline from the year-ago reported figure.
Our Take
Envista ended second-quarter 2024 on a dismal note, with revenues and earnings missing the respective estimates. The company witnessed a decline in both segments. NVST stated ongoing investments aimed at accelerating growth and improving profitability as reasons for the disappointing performance. Further, the contraction of both margins looks discouraging, too.
According to the company, reported sales growth for Envista’s Spark division slowed in the quarter as it is now deferring a larger portion of case revenues. The company currently recognizes a portion of Spark revenues at the start of a case and the balance over the treatment time. This has impacted the quarter’s sales even when case starts grew above the market in the second quarter.
Diagnostics sales were impacted by the higher interest rate environment. The business contracted in high single digits in the quarter due to the continued impact of exiting some lower priority, more price-sensitive geographic markets.
Zacks Rank and Key Picks
Envista currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has a long-term earnings growth rate of 16.1% for 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2024 earnings of $1.14 per share, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company beat on earnings in each of the trailing four quarters, the average surprise being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2 at present, reported second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion outpaced the Zacks Consensus Estimate by 0.5%.
DGX has a historical five-year earnings growth rate of 7.4% compared with the industry’s 4.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.31%.