A month has gone by since the last earnings report for Hill-Rom . Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hill-Rom 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.
Hill-Rom Beats on Q4 Earnings
Hill-Rom delivered fourth-quarter fiscal 2019 adjusted earnings per share of $1.69 excluding certain special items. This figure improved 4.3% from the year-ago quarter and also surpassed the Zacks Consensus Estimate by 2.4%.
Full-year adjusted earnings per share was $5.08, a 6.9% improvement from the year-ago period.
Revenues in the fourth quarter came in at $782.8 million, reflecting a 3.1% increase from the year-ago period. The top line also beat the Zacks Consensus Estimate by 3.2%. Revenues were $2.91 billion in fiscal 2019, a 2.1% rise from fiscal 2018.
Geographically, in the fourth quarter, U.S. revenues grew 4% in the reported quarter while the metric outside the United States improved 0.8% (up 4.3% at constant exchange rate or CER). Core revenue growth (after excluding foreign currency, divestitures and non-strategic assets the company may exit including the Surgical Solutions international OEM business) was 8%, exceeding the company’s guidance of 5% growth.
Segment Details
In the quarter under review, Patient Support Systems revenues rose 10% year over year (up 11% at CER) to $415 million. This segment’s core revenues were up 14%, representing strong performance across the diversified portfolio of connected solutions and services, including double-digit growth of care communication platforms and med-surg bed systems.
Revenues at the Front Line Care segment dropped 2% to $257 million (down 1% at CER). According to the company, a difficult comparison from the launch of the Monarch Airway Clearance System in the United States in 2018 offset strong growth in other respiratory health products and certain diagnostic tools, including thermometry and the vision portfolio.
The Surgical Solutions segment revenues slipped 8% (down 6% at CER) to $110 million affected by surgical revenue divestiture. However, core revenue increased 11% on strong growth of patient positioning and operating room equipment, including Integrated Table Motion for the da Vinci Xi Surgical System.
Cash Position
The company exited the fiscal with a cash and cash equivalent of $214.1 million compared with $183 million at the end of fiscal 2018. For the full year, net cash provided by operating activities was $4301.1 million compared with $395.2 million at the end of the year-ago period.
Fiscal 2020 Guidance
Hill-Rom has initiated its fiscal 2020 outlook. Adjusted EPS is expected in the $5.46-5.56 range excluding special items. The Zacks Consensus Estimate for fiscal 2020 earnings stands at $5.48, within the company’s guided band.
The company’s revenue expectation for the full year is projected in the range of 1-2% on both a reported and constant currency basis. Core revenues are projected to grow at 4-5% rate. The Zacks Consensus Estimate for fiscal 2020 revenues is pegged at $2.92 billion.
For first-quarter fiscal 2020, revenues are expected to be flat to the prior year on a reported and CER basis. Core revenue growth is predicted at 5-6%. The Zacks Consensus Estimate for quarterly revenues is pegged at $685.23 million.
Adjusted earnings in the fiscal first quarter are estimated in the range of $1.07-$1.09 per share. The Zacks Consensus Estimate for the same stands at $1.09, at the upper end of the company’s guided band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Hill-Rom has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hill-Rom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Hill-Rom (HRC) Up 2.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Hill-Rom . Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hill-Rom 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.
Hill-Rom Beats on Q4 Earnings
Hill-Rom delivered fourth-quarter fiscal 2019 adjusted earnings per share of $1.69 excluding certain special items. This figure improved 4.3% from the year-ago quarter and also surpassed the Zacks Consensus Estimate by 2.4%.
Full-year adjusted earnings per share was $5.08, a 6.9% improvement from the year-ago period.
Revenues in the fourth quarter came in at $782.8 million, reflecting a 3.1% increase from the year-ago period. The top line also beat the Zacks Consensus Estimate by 3.2%. Revenues were $2.91 billion in fiscal 2019, a 2.1% rise from fiscal 2018.
Geographically, in the fourth quarter, U.S. revenues grew 4% in the reported quarter while the metric outside the United States improved 0.8% (up 4.3% at constant exchange rate or CER). Core revenue growth (after excluding foreign currency, divestitures and non-strategic assets the company may exit including the Surgical Solutions international OEM business) was 8%, exceeding the company’s guidance of 5% growth.
Segment Details
In the quarter under review, Patient Support Systems revenues rose 10% year over year (up 11% at CER) to $415 million. This segment’s core revenues were up 14%, representing strong performance across the diversified portfolio of connected solutions and services, including double-digit growth of care communication platforms and med-surg bed systems.
Revenues at the Front Line Care segment dropped 2% to $257 million (down 1% at CER). According to the company, a difficult comparison from the launch of the Monarch Airway Clearance System in the United States in 2018 offset strong growth in other respiratory health products and certain diagnostic tools, including thermometry and the vision portfolio.
The Surgical Solutions segment revenues slipped 8% (down 6% at CER) to $110 million affected by surgical revenue divestiture. However, core revenue increased 11% on strong growth of patient positioning and operating room equipment, including Integrated Table Motion for the da Vinci Xi Surgical System.
Cash Position
The company exited the fiscal with a cash and cash equivalent of $214.1 million compared with $183 million at the end of fiscal 2018. For the full year, net cash provided by operating activities was $4301.1 million compared with $395.2 million at the end of the year-ago period.
Fiscal 2020 Guidance
Hill-Rom has initiated its fiscal 2020 outlook. Adjusted EPS is expected in the $5.46-5.56 range excluding special items. The Zacks Consensus Estimate for fiscal 2020 earnings stands at $5.48, within the company’s guided band.
The company’s revenue expectation for the full year is projected in the range of 1-2% on both a reported and constant currency basis. Core revenues are projected to grow at 4-5% rate. The Zacks Consensus Estimate for fiscal 2020 revenues is pegged at $2.92 billion.
For first-quarter fiscal 2020, revenues are expected to be flat to the prior year on a reported and CER basis. Core revenue growth is predicted at 5-6%. The Zacks Consensus Estimate for quarterly revenues is pegged at $685.23 million.
Adjusted earnings in the fiscal first quarter are estimated in the range of $1.07-$1.09 per share. The Zacks Consensus Estimate for the same stands at $1.09, at the upper end of the company’s guided band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Hill-Rom has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hill-Rom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.