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Why Is ResMed (RMD) Up 3.1% Since the Last Earnings Report?
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More than a month has gone by since the last earnings report for ResMed Inc. (RMD - Free Report) . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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.
Recent Earnings
ResMed announced fourth-quarter fiscal 2017 adjusted earnings per share (EPS) of $0.77, up 4.1% from the prior-year quarter level. Earnings also beat the Zacks Consensus Estimate by $0.02.
Including one-time items, ResMed reported EPS of $0.71 in the quarter, up 20.4% year over year.
For the full year, adjusted EPS came in at $2.82, a 5.2% increase from fiscal 2016 figure.
Revenues in Detail
Revenues in the reported quarter increased 7.3% (up 8% at constant exchange rate or CER) year over year to $556.7 million. This figure also exceeded the Zacks Consensus Estimate of $549 million. Excluding the contribution from the Brightree business, revenues increased 6% year over year.
Full-year 2017 revenues came in at $2.07 billion, a 12.3% rally from the year-ago period.
Geographically, revenues in the Americas rose 8% year over year to $350.2 million, which included Brightree revenues of $36.2 million. Excluding Brightree, revenues in the Americas totaled $314 million, reflecting a 6% increase over the prior-year quarter. This solid result was fueled by growth in devices as well as a low double-digit rise in software sales.
Combined revenues from EMEA and APAC regions were $206.5 million, highlighting a 9% rise at CER compared with the same period, last year. Growth was particularly strong in the UK, France, Japan, Australia and New Zealand.
Adjusted gross margin expanded 11 basis points (bps) year over year to 58.2% in the reported quarter. Selling, general and administrative expenses were up 10.4% year over year to $147.9 million, while there was a 6.8% increase in Research and Development expenses to $36.7 million. This has further led to a 9.7% rise in adjusted operating expenses, amounting to $184.6 million. Accordingly, adjusted operating margin in the quarter contracted 61 bps to 24.9%.
Financial Update
ResMed exited the year 2017 with cash and cash equivalents of $821.9 million compared with $731.4 million at the end of 2016.
In the entire year, the company generated $414.1 million of cash flow from operations, down from the year-ago figure of $547.9 million, displaying weak underlying earnings and a decline in net working capital balances.
Through fiscal 2017, ResMed paid $186.3 million in dividends.
Also, during its fiscal fourth-quarter earnings release, ResMed announced an increase in quarterly dividend by 6% to 35 cents per share. The dividend will be paid out on on Sep 21, 2017, to shareholders on record as of Aug 17, 2017.
As previously declared, ResMed temporarily suspended its share repurchase program due to recent acquisitions. However, the company still expects to recommence this buy-back program in the second quarter of fiscal 2018.
Guidance
While ResMed has not provided any definite guidance for fiscal 2018, the company stated that it is well-positioned to achieve its 2020 financial and strategic goals. The company is successfully working on a pipeline of new products and connected care solutions for sleep apnea, COPD, neuromuscular disease and other clinical adjacencies.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last month as none of them issued any earnings estimate revisions.
At this time, ResMed's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We expect below average returns from the stock in the next few months.
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Why Is ResMed (RMD) Up 3.1% Since the Last Earnings Report?
More than a month has gone by since the last earnings report for ResMed Inc. (RMD - Free Report) . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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.
Recent Earnings
ResMed announced fourth-quarter fiscal 2017 adjusted earnings per share (EPS) of $0.77, up 4.1% from the prior-year quarter level. Earnings also beat the Zacks Consensus Estimate by $0.02.
Including one-time items, ResMed reported EPS of $0.71 in the quarter, up 20.4% year over year.
For the full year, adjusted EPS came in at $2.82, a 5.2% increase from fiscal 2016 figure.
Revenues in Detail
Revenues in the reported quarter increased 7.3% (up 8% at constant exchange rate or CER) year over year to $556.7 million. This figure also exceeded the Zacks Consensus Estimate of $549 million. Excluding the contribution from the Brightree business, revenues increased 6% year over year.
Full-year 2017 revenues came in at $2.07 billion, a 12.3% rally from the year-ago period.
Geographically, revenues in the Americas rose 8% year over year to $350.2 million, which included Brightree revenues of $36.2 million. Excluding Brightree, revenues in the Americas totaled $314 million, reflecting a 6% increase over the prior-year quarter. This solid result was fueled by growth in devices as well as a low double-digit rise in software sales.
Combined revenues from EMEA and APAC regions were $206.5 million, highlighting a 9% rise at CER compared with the same period, last year. Growth was particularly strong in the UK, France, Japan, Australia and New Zealand.
Adjusted gross margin expanded 11 basis points (bps) year over year to 58.2% in the reported quarter. Selling, general and administrative expenses were up 10.4% year over year to $147.9 million, while there was a 6.8% increase in Research and Development expenses to $36.7 million. This has further led to a 9.7% rise in adjusted operating expenses, amounting to $184.6 million. Accordingly, adjusted operating margin in the quarter contracted 61 bps to 24.9%.
Financial Update
ResMed exited the year 2017 with cash and cash equivalents of $821.9 million compared with $731.4 million at the end of 2016.
In the entire year, the company generated $414.1 million of cash flow from operations, down from the year-ago figure of $547.9 million, displaying weak underlying earnings and a decline in net working capital balances.
Through fiscal 2017, ResMed paid $186.3 million in dividends.
Also, during its fiscal fourth-quarter earnings release, ResMed announced an increase in quarterly dividend by 6% to 35 cents per share. The dividend will be paid out on on Sep 21, 2017, to shareholders on record as of Aug 17, 2017.
As previously declared, ResMed temporarily suspended its share repurchase program due to recent acquisitions. However, the company still expects to recommence this buy-back program in the second quarter of fiscal 2018.
Guidance
While ResMed has not provided any definite guidance for fiscal 2018, the company stated that it is well-positioned to achieve its 2020 financial and strategic goals. The company is successfully working on a pipeline of new products and connected care solutions for sleep apnea, COPD, neuromuscular disease and other clinical adjacencies.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last month as none of them issued any earnings estimate revisions.
ResMed Inc. Price and Consensus
ResMed Inc. Price and Consensus | ResMed Inc. Quote
VGM Scores
At this time, ResMed's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We expect below average returns from the stock in the next few months.