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Why Is Inogen (INGN) Down 5.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Inogen (INGN - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Inogen due for a breakout? 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 drivers.

Inogen Q2 Earnings Miss Estimates, Rental Revenues Down

Inogen reported second-quarter 2019 earnings per share (EPS) of 45 cents, which missed the Zacks Consensus Estimate of 50 cents. The bottom line also plunged 30.8% year over year.

Revenues of the company came in at $101.1 million, missing the Zacks Consensus Estimate by 5.6%. On a year-over-year basis, the top line climbed 3.9%.

Segmental Details

Sales revenues amounted to $95.9 million in the quarter under review, up 4.2% on a year-over-year basis.

Rental revenues totaled $5.2 million, down 1%.

Revenues by Region and Category

Business-to-business revenues in the United States summed $29.7 million, down 10% on a year-over-year basis. Internationally, this segment recorded revenues of $22.6 million, up 8.7% and 14.7% at constant currency, on continued adoption by the company’s European partners.

Direct-to-consumer revenues rose 14% year over year to $43.6 million in the quarter under review on higher sales representative productivity.

Margins

In the quarter under review, gross profit was $50.2 million, up 3.6% year over year. Gross margin came in at 49.7%, down 10 basis points (bps).

Operating income was $12.1 million, down 13.4% year over year. Operating margin came in at 12% of net revenues, down a substantial 240 bps in the prior-year quarter.

Guidance

Inogen slashed its 2019 revenue guidance to $370-$375 million from the earlier $405-$415 million, calling for year-over-year growth of 3.3-4.7%. Per management, the company has slashed expectations for the direct-to-consumer sales channel, primarily because of a drop in sales headcount.
Additionally, third-quarter 2019 revenues are expected to decline on a year-over-year basis.

Inogen also cut its 2019 operating income guidance to $26-$28 million from the previous band of $42-$44 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -54.55% due to these changes.

VGM Scores

At this time, Inogen has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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. It's no surprise Inogen has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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