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Why Is Luminex (LMNX) Up 11.2% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for Luminex Corporation (LMNX - Free Report) . Shares have added about 11.2% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is LMNX due for a pullback? 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.

Recent Earnings

Headquartered in Austin, TX, Luminex (LMNX - Free Report) reported adjusted earnings of 17 cents per share in the fourth quarter of 2017, surpassing the Zacks Consensus Estimate of 9 cents by 88.9%. Adjusted earnings also increased 216.7% year over year.

Revenues in the quarter increased almost 8.2% year over year to $78.2 million, outpacing the Zacks Consensus Estimate of $77.3 million.

Segment Details

System Sales: Revenues increased 7.6% on a year-over-year basis to $10.3 million. Notably, the company shipped 288 multiplexing analyzers in the quarter. Here we note that the systems included MAGPIX, LX and FLEXMAP 3D. Further, the company placed 88 sample-to-answer molecular systems under contract, reaching the total number of active customers to more than 425.

Assay Revenues: Assay revenues grew 13.9% year over year to $41.8 million.

Royalty Revenues: Sales at this segment increased 11.5% on a year-over-year basis to around $11.3 million.

Consumables Sales: Revenues at the segment declined 9.9% to $10 million.

Margin & Balance Sheet Details

Gross profits increased 13.8% from the year-ago quarter to $50.4 million, primarily driven by higher revenues. The gross margin expanded 318 basis points (bps) to 64.4%. Increasing volumes for both VERIGENE and ARIES and internal manufacturing process improvements resulted in strong gross margin expansion.

Adjusted operating expenses totaled $39.1 million, reflecting a 6.7% decline from the year-ago quarter. Selling, general and administrative expenses increased 0.5% to $28.7 million. Research and development (R&D) expenses contracted 22.3% year over year to $10.4 million.

Meanwhile, adjusted operating margin expanded a massive 1118 bps to 14.4%. Revenue growths across most of the segments, gross profit expansion and consistent efforts to control operating expenses bolstered the company’s operating margin in the quarter.

Luminex exited full-year 2017 with cash and cash equivalents of $127.1 million, compared with $93.5 million at the end of 2016.
Guidance

Luminex provided 2018 annual revenue guidance in the range of $310-$316 million, which indicates growth of 2% at the midpoint year over year. The company expects first-quarter 2018 revenues in the band of $79-$81 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

Luminex Corporation Price and Consensus

VGM Scores

At this time, LMNX has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. 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 B. 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

LMNX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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