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Why Is Phibro (PAHC) Down 7% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Phibro Animal Health Corporation (PAHC - Free Report) . Shares have lost about 7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it 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 catalysts.
Recent Earnings
Phibro reported adjusted earnings per share (EPS) of $0.39 in the second quarter of fiscal 2017, up 5.4% year over year. Adjusted EPS also exceeded the Zacks Consensus Estimate by 8.3%.
Including one-time items, the company reported EPS of $0.34, reflecting a decline of 17.1% from the year-ago quarter’s $0.41.
Net Sales
In the reported quarter, Phibro’s net sales were $191.6 million, down a marginal 0.2% year over year. The improvement was driven by volume growth at the Animal Health segment, which was partially offset by a decline in Mineral Nutrition sales.
Sales by Segments
Net sales at the Animal Health segment increased 2% to $123.7 million in the reported quarter on the back of volume increases in the nutritional specialty and vaccine product groups within the segment. Sales from vaccines increased 45%, principally on volume growth of products for poultry and swine industries.
However, sales at Medicated feed additives (MFAs) and Other (the biggest section of this segment) declined 9% primarily due to international volume declines resulting from economic conditions in Brazil and the timing of orders in certain other markets. Domestic net sales of MFAs and Other declined slightly due to reduced volumes of medically important antibacterials, partially offset by growth in other products.
Nutritional specialty products sales rose 21%, owing to volume growth in the U.S. for Phibro’s dairy and poultry products.
Net sales at the Mineral Nutrition segment declined 4% to $56.7 million on lower average selling prices due to fall in underlying raw material commodity prices.
Net sales at the Performance Products segment declined 2% to $11.2 million. This was due to lower average selling prices of personal care ingredients and copper-based products and lower volumes of copper-based products, partially offset by higher volumes of personal care ingredients.
Operational Update
Phibro’s fiscal second-quarter gross profit increased 3.3% year over year to $63.5 million. The gross margin also expanded 108 basis points (bps) to 33.1%.
Selling, general and administrative expenses increased 5.4% to $40.9 million. Operating margin contracted 4 bps year over year to 11.8% in the quarter.
Financial Update
Year to date, Phibro generated $47.7 million in cash flow from operations compared with $5.6 million in the year-ago period. Capital expenditure amounted to $10.6 million in this period, reflecting a reduction from $17.7 million in the first six months of fiscal 2016.
FY17 Outlook
Phibro reaffirmed its fiscal 2017 guidance. The company currently expects to generate net sales of $750–$770 million, reflecting 0–2% annualized growth for the fiscal year. The current Zacks Consensus Estimate of $758.8 million falls within the guided range.
Phibro still expects to deliver adjusted EPS in the range of $1.38–$1.45, displaying an annualized decline of 3% to growth of 1%. The current Zacks Consensus Estimate of $1.42 for lies within the company's guided range.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Phibro Animal Health Corporation Price and Consensus
At this time, the Phibro Animal Health's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
The stock a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Phibro (PAHC) Down 7% Since the Last Earnings Report?
A month has gone by since the last earnings report for Phibro Animal Health Corporation (PAHC - Free Report) . Shares have lost about 7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it 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 catalysts.
Recent Earnings
Phibro reported adjusted earnings per share (EPS) of $0.39 in the second quarter of fiscal 2017, up 5.4% year over year. Adjusted EPS also exceeded the Zacks Consensus Estimate by 8.3%.
Including one-time items, the company reported EPS of $0.34, reflecting a decline of 17.1% from the year-ago quarter’s $0.41.
Net Sales
In the reported quarter, Phibro’s net sales were $191.6 million, down a marginal 0.2% year over year.
The improvement was driven by volume growth at the Animal Health segment, which was partially offset by a decline in Mineral Nutrition sales.
Sales by Segments
Net sales at the Animal Health segment increased 2% to $123.7 million in the reported quarter on the back of volume increases in the nutritional specialty and vaccine product groups within the segment. Sales from vaccines increased 45%, principally on volume growth of products for poultry and swine industries.
However, sales at Medicated feed additives (MFAs) and Other (the biggest section of this segment) declined 9% primarily due to international volume declines resulting from economic conditions in Brazil and the timing of orders in certain other markets. Domestic net sales of MFAs and Other declined slightly due to reduced volumes of medically important antibacterials, partially offset by growth in other products.
Nutritional specialty products sales rose 21%, owing to volume growth in the U.S. for Phibro’s dairy and poultry products.
Net sales at the Mineral Nutrition segment declined 4% to $56.7 million on lower average selling prices due to fall in underlying raw material commodity prices.
Net sales at the Performance Products segment declined 2% to $11.2 million. This was due to lower average selling prices of personal care ingredients and copper-based products and lower volumes of copper-based products, partially offset by higher volumes of personal care ingredients.
Operational Update
Phibro’s fiscal second-quarter gross profit increased 3.3% year over year to $63.5 million. The gross margin also expanded 108 basis points (bps) to 33.1%.
Selling, general and administrative expenses increased 5.4% to $40.9 million. Operating margin contracted 4 bps year over year to 11.8% in the quarter.
Financial Update
Year to date, Phibro generated $47.7 million in cash flow from operations compared with $5.6 million in the year-ago period. Capital expenditure amounted to $10.6 million in this period, reflecting a reduction from $17.7 million in the first six months of fiscal 2016.
FY17 Outlook
Phibro reaffirmed its fiscal 2017 guidance. The company currently expects to generate net sales of $750–$770 million, reflecting 0–2% annualized growth for the fiscal year. The current Zacks Consensus Estimate of $758.8 million falls within the guided range.
Phibro still expects to deliver adjusted EPS in the range of $1.38–$1.45, displaying an annualized decline of 3% to growth of 1%. The current Zacks Consensus Estimate of $1.42 for lies within the company's guided range.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Phibro Animal Health Corporation Price and Consensus
Phibro Animal Health Corporation Price and Consensus | Phibro Animal Health Corporation Quote
VGM Scores
At this time, the Phibro Animal Health's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
The stock a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.