Why Is Luminex (LMNX) Down 3.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Luminex (LMNX). Shares have lost about 3.1% in that time frame, underperforming the S&P 500.

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

Luminex Reports Q1 Loss, Misses Revenue Estimates

Luminex Corporation reported first-quarter 2019 loss of 7 cents per share (EPS), against the Zacks Consensus Estimate of earnings of 7 cents per share. Notably, the company reported earnings of 25 cents per share in the year-ago quarter.

Revenues in Detail

Revenues came in at $82.4 million, missing the Zacks Consensus Estimate by 0.9%. On a year-over-year basis, the top line dropped 0.4%.

Total sample-to-answer franchise revenues grew 16% from the prior-year quarter.

Segmental Analysis

System Sales

Revenues at this segment totaled $15.7 million, soaring 97.5% from the year-ago quarter.

Consumable Sales

This segment accounted for $10.7 million of revenues, down 9.7% year over year.

Royalty Revenues

Royalty revenues summed $14.2 million, up 15.8% on a year-over-year basis.

Assay Revenues

This segment reported revenues worth $34.8 million, down 24.1% on a year-over-year basis.

Service Revenues

Revenues in the segment grossed $5.4 million, up 87.4% from the year-ago quarter.

Other

Other revenues came in at $1.6 million, down 13.9% from a year ago.

Business Details

Per management, this Texas-based company placed 50 sample-to-answer molecular systems under contract during the first quarter. Active sample-to-answer customers totaled 625 in the quarter under review.

Financial Update

As of Mar 31, 2019, cash and cash equivalents totaled $61.7 million, down 19.3% from 2018-end level.

Cash flow from operating activities for the three months ended Mar 31, 2019, came in at ($7.1) million, against $13.9 million in the prior-year quarter.

Margins

Gross profit in the reported quarter was $45.8 million, down 14.5% year over year. Gross margin was 55.6%, contracting 920 bps.

Research and development expenses grossed $15 million, up 45.7% year over year. Selling, general and administrative expenses in the first quarter were $31.5 million, up 21.9% year over year. Total operating expenses amounted to $49.4 million, up 28.9% from the year-ago reported figure.

The company incurred operating loss of $3.6 million, against the year-ago quarter’s operating income of $15.3 million.

Guidance

For the second quarter of 2019, the company anticipates revenues between $80 million and $83 million. The mid-point of the latest guidance of $81.5 million lies below the Zacks Consensus Estimate of $82.5 million.

Notably the company reiterated 2019 revenue outlook, which is estimated in the band of $337-$343 million. The mid-point of the latest guidance of $340 million is below the Zacks Consensus Estimate of $341.6 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -92% due to these changes.

VGM Scores

At this time, Luminex has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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, Luminex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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