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Flir Systems (FLIR) Down 5.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Flir Systems (FLIR - Free Report) . Shares have lost about 5.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Flir Systems 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.

FLIR Systems Q1 Earnings Beat Estimates, Improve Y/Y

FLIR Systems Inc.’s first-quarter 2019 adjusted earnings of 53 cents per share surpassed the Zacks Consensus Estimate of 48 cents by 10.4%. Also, the reported figure increased 9.6% from 48 cents registered in the prior-year quarter.

The company reported GAAP earnings of 45 cents compared with earnings of 28 cents in the year-ago quarter.

Inside the Headlines

FLIR Systems’ revenues inched up 1.2% year over year to $444.7 million in the reported quarter. Also, the top line beat the Zacks Consensus Estimate of $439 million by 1.3%. Impressive performance by the Industrial segment as well as the Government and Defense segment led to year-over-year increase in the top line.

Organic revenues rose 0.9% year over year. The figure excluded revenues from the acquisitions of Endeavor Robotics and Aeryon Labs in the first quarter of 2019 as well as the same from the divested security businesses in the first quarter of 2018.

Segment-wise, quarterly revenues in the Industrial segment were up 5.1% to $179.4 million. The upside can be attributed to higher sales of cooled thermal cores, unmanned aerial systems (UAS) and optical gas imaging products.

Revenues in the Government and Defense segment totaled $173.4 million, up 8.8% on a year-over-year basis. The upside can be attributed to strength in unmanned systems (including the acquisitions of Endeavor Robotics and Aeryon Labs) and surveillance systems.

Moreover, the Commercial segments’ revenues amounted to $92 million, down 16.1% from the year-ago quarter’s figure. The downside was caused by the impacts from continued restructuring in outdoor and tactical systems (OTS) as well as adverse foreign exchange effects.

The company’s total operating expenses fell 6% year over year to $152.5 million. Consequently, adjusted operating income came in at $97.3 million compared with $87.8 million in the prior-year quarter, up 10.9%.

Liquidity & Cash Flow

As of Mar 31, 2019, the company's cash and cash equivalents were $284.3 million compared with $512.1 million as of Dec 31, 2018. Long-term debt totaled $656.9 million, up from $421.9 million as of Dec 31, 2018.

Cash flow from operating activities in the first quarter 2019 amounted to $55.5 million, up 28.6% from the prior-year quarter’s figure of $43.2 million.

Outlook

The company continues to expect 2019 adjusted earnings per share in the range of $2.30-$2.36 on revenues of $1.92-$1.95 billion.

Currently, the Zacks Consensus Estimate for 2019 earnings is pegged at $2.34 on revenues of $1.93 billion. Both the earnings and revenue estimates lie within the company provided guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Flir Systems has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, 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 C. 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, Flir Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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