Yahoo Finance Idexx (IDXX) Up 11.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Idexx Laboratories (IDXX). Shares have added about 11.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Idexx 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.
IDEXX Q1 Earnings Top Estimates, Margins Decline
IDEXX posted first-quarter 2020 earnings per share of $1.29, reflecting a 10.2% year-over-year rise. The figure surpassed the Zacks Consensus Estimate by 4.9%.
Comparable-constant-currency earnings per share growth was 13%, which excludes the impact of changes in foreign exchange rates and the tax benefits of share-based compensation activity.
Revenues in Detail
First-quarter revenues grew 9% year over year to $626.3 million. The metric, however, missed the Zacks Consensus Estimate by 0.9%. The year-over-year upside was primarily driven by strong global gains in Companion Animal Group (“CAG”) Diagnostics’ recurring revenues.
Segmental Analysis
IDEXX derives revenues from four operating segments — CAG; Water; Livestock, Poultry and Dairy (LPD); and Other.
In the first quarter, CAG revenues rose 8% (up 9% organically) year over year to $551.9 million.
The Water segment’s revenues were up 13% (up 15% organically) year over year to $34.1 million.
LPD revenues rose 8% (up 12% organically) to $34.1 million.
Revenues at the Other segment grew 13.4% on a reported basis to $6 million.
Margins
Gross profit in the first quarter rose 8.4% to $359.6 million. However, gross margin contracted 15 basis points (bps) to 57.4% on a 9.1% rise in cost of revenues to $266.7 million.
Sales and marketing expenses rose 8.9% to $116.1 million, while general and administrative expenses moved up 9% to $65.8 million. Additionally, research and development expenses rose 5.7% to $33.3 million. Operating margin in the quarter contracted 7 bps to 23%.
Financial Position
IDEXX exited the first quarter with cash and cash equivalents of $81.4 million compared with $90.3 million at the end of 2019.
Net cash provided by operating activities at the end of the first quarter was $27.9 million compared with $34.4 million at the end of 2019.
2020 Outlook Withdrawn
The uncertainties regarding the duration and impact of the coronavirus pandemic on veterinary service providers have compelled IDEXX Laboratories to withdraw its previously-issued 2020 financial guidance. It did not even provide a guidance for the second quarter.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months. The consensus estimate has shifted -24.67% due to these changes.
VGM Scores
At this time, Idexx has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Idexx has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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