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Why Is Waters (WAT) Down 4.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Waters (WAT - Free Report) . Shares have lost about 4.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Waters 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.
Waters' Q4 Earnings & Revenues Beat Estimates
Waters reported fourth-quarter 2021 non-GAAP earnings of $3.67 per share, which surpassed the Zacks Consensus Estimate by 5.8%. Further, the bottom line improved 0.5% on a year-over-year basis.
Net sales of $836.45 million beat the Zacks Consensus Estimate of $820.3 million. The figure was up 6% and 8% each from the corresponding year-ago quarter’s reported figures on a reported and constant-currency basis, respectively.
Top-line growth was driven by a solid momentum across pharmaceutical, industrial, and academic and government end markets. Strong performance in Asia, the Americas and Europe contributed well. Strong performance delivered by the Waters and TA segments was another positive.
Top Line in Detail
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: WAT operates in two organized segments, namely Waters and TA.
The Waters segment (88.7% of net sales) generated $742.1 million of sales, up 5% from the year-ago quarter’s figure. Sales in the TA segment were $94.4 million (11.3% of net sales), reflecting 14% year-over-year growth.
By Products & Services: The division comprises three segments, such as Instruments, Services and Chemistry.
Instruments sales (52.8% of sales) were $441.2 million, up 10% on a year-over-year basis.
Service sales (30.7% of the sales) were $256.5 million, increasing 1% year over year.
Chemistry sales (16.5% of the sales) were $138.7 million, up 5% from the year-ago quarter’s level.
Moreover, service and chemistry segments generated recurring revenues of $395.2 million, up 2% from the year-ago quarter’s level.
By Markets: Waters serves three end markets, namely Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (58.8% of net sales) generated sales of $491.9 million, which increased 7% on a year-over-year basis.
The Industrial market’s (29.6% of sales) sales were $247.3 million, up 6% from the year-ago quarter’s level.
Academic & Government (11.6% of sales) generated $97.3 million of sales. The figure increased 4% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (38.5% of net sales) generated $321.7 million of sales, up 9% on a year-over-year basis.
The Americas (32.5% of sales) generated $271.9 million of sales, increasing 8% year over year. Sales in the United States increased 8% year over year.
Europe (29% of sales) generated $242.8 million of sales, up 1% from the prior-year quarter’s level.
Operating Details
In the fourth quarter, non-GAAP selling and administrative expenses were $169.3 million, reflecting an increase of 12.2% from the year-ago quarter’s level. As a percentage of net sales, the figure expanded 100 basis points (bps) year over year.
Research and development spending was $43.3 million, up 9.2% from the year-ago reported figure. As a percentage of net sales, the figure expanded 16 bps year over year.
The adjusted operating margin was 32.6%, which contracted 240 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2021, cash, cash equivalents and investments were $569.3 million, lower than $655.2 million as of Oct 2, 2021.
Account receivables stood at $612.6 million at the end of the fourth quarter, up from $532.9 million in the last reported quarter.
Waters generated cash from operation of $217.9 million in the reported quarter, up from $167.9 million in the prior quarter.
Waters recorded a free cash flow of $187 million in the fourth quarter.
Guidance
For first-quarter 2022, Waters expects non-GAAP earnings of $2.25-$2.35 per share.
Waters anticipates net sales growth of 6-8% on constant-currency basis.
For 2021, Waters anticipates non-GAAP earnings of $11.75-$12.00 per share.
Waters expects 2021 net sales growth of 5-7% on constant-currency basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.84% due to these changes.
VGM Scores
At this time, Waters has a nice Growth Score of B, a grade with the same score on the momentum front. 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, Waters 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 Waters (WAT) Down 4.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Waters (WAT - Free Report) . Shares have lost about 4.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Waters 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.
Waters' Q4 Earnings & Revenues Beat Estimates
Waters reported fourth-quarter 2021 non-GAAP earnings of $3.67 per share, which surpassed the Zacks Consensus Estimate by 5.8%. Further, the bottom line improved 0.5% on a year-over-year basis.
Net sales of $836.45 million beat the Zacks Consensus Estimate of $820.3 million. The figure was up 6% and 8% each from the corresponding year-ago quarter’s reported figures on a reported and constant-currency basis, respectively.
Top-line growth was driven by a solid momentum across pharmaceutical, industrial, and academic and government end markets. Strong performance in Asia, the Americas and Europe contributed well. Strong performance delivered by the Waters and TA segments was another positive.
Top Line in Detail
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: WAT operates in two organized segments, namely Waters and TA.
The Waters segment (88.7% of net sales) generated $742.1 million of sales, up 5% from the year-ago quarter’s figure. Sales in the TA segment were $94.4 million (11.3% of net sales), reflecting 14% year-over-year growth.
By Products & Services: The division comprises three segments, such as Instruments, Services and Chemistry.
Instruments sales (52.8% of sales) were $441.2 million, up 10% on a year-over-year basis.
Service sales (30.7% of the sales) were $256.5 million, increasing 1% year over year.
Chemistry sales (16.5% of the sales) were $138.7 million, up 5% from the year-ago quarter’s level.
Moreover, service and chemistry segments generated recurring revenues of $395.2 million, up 2% from the year-ago quarter’s level.
By Markets: Waters serves three end markets, namely Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (58.8% of net sales) generated sales of $491.9 million, which increased 7% on a year-over-year basis.
The Industrial market’s (29.6% of sales) sales were $247.3 million, up 6% from the year-ago quarter’s level.
Academic & Government (11.6% of sales) generated $97.3 million of sales. The figure increased 4% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (38.5% of net sales) generated $321.7 million of sales, up 9% on a year-over-year basis.
The Americas (32.5% of sales) generated $271.9 million of sales, increasing 8% year over year. Sales in the United States increased 8% year over year.
Europe (29% of sales) generated $242.8 million of sales, up 1% from the prior-year quarter’s level.
Operating Details
In the fourth quarter, non-GAAP selling and administrative expenses were $169.3 million, reflecting an increase of 12.2% from the year-ago quarter’s level. As a percentage of net sales, the figure expanded 100 basis points (bps) year over year.
Research and development spending was $43.3 million, up 9.2% from the year-ago reported figure. As a percentage of net sales, the figure expanded 16 bps year over year.
The adjusted operating margin was 32.6%, which contracted 240 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2021, cash, cash equivalents and investments were $569.3 million, lower than $655.2 million as of Oct 2, 2021.
Account receivables stood at $612.6 million at the end of the fourth quarter, up from $532.9 million in the last reported quarter.
Waters generated cash from operation of $217.9 million in the reported quarter, up from $167.9 million in the prior quarter.
Waters recorded a free cash flow of $187 million in the fourth quarter.
Guidance
For first-quarter 2022, Waters expects non-GAAP earnings of $2.25-$2.35 per share.
Waters anticipates net sales growth of 6-8% on constant-currency basis.
For 2021, Waters anticipates non-GAAP earnings of $11.75-$12.00 per share.
Waters expects 2021 net sales growth of 5-7% on constant-currency basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.84% due to these changes.
VGM Scores
At this time, Waters has a nice Growth Score of B, a grade with the same score on the momentum front. 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, Waters has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.