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Quest Diagnostics (DGX) Up 6.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Quest Diagnostics (DGX - Free Report) . Shares have added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Quest Diagnostics 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.
Quest Diagnostics Incorporated’s second-quarter 2024 adjusted earnings per share of $2.35 beat the Zacks Consensus Estimate by 1.7%. The metric also exceeded the year-ago adjusted figure by 2.2%.
Certain one-time expenses, like the ones related to amortization expenses, certain restructuring and integration charges, other expenses and excess tax benefits associated with stock-based compensations, were excluded from the quarter’s adjusted figures.
GAAP earnings came in at $2.03 per share, down 1% from the last year’s comparable figure.
Quarterly Details
Revenues reported in the second quarter rose 2.5% year over year to $2.40 billion. The metric surpassed the Zacks Consensus Estimate by 0.5%.
Diagnostic Information Services revenues in the quarter were up 2.9% on a year-over-year basis to $2.33 billion. This figure compares with our model’s projection of $2.31 billion for the second quarter.
Volumes (measured by the number of requisitions) were up 1.1% year over year in the second quarter. Revenue per requisition increased 1.6% year over year.
Margins
The cost of services during the reported quarter was $1.59 billion, up 3% year over year. The gross profit came in at $804 million, up 1.5% year over year. The gross margin was 33.5%, reflecting a 33-basis point (bps) contraction from the year-ago figure.
SG&A expenses were $416 million in the quarter under review, similar to the second quarter of 2023. The adjusted operating margin of 16.2% represented a 10-bps expansion year over year.
Cash, Capital Structure and Solvency
Quest Diagnostics exited the second quarter of 2024 with cash and cash equivalents of $271 million compared with $474 million at the end of the first quarter. The cumulative net cash provided by operating activities at the end of the second quarter of 2024 was $514 million compared with $538 million in the comparable 2023 period.
Quest Diagnostics provided an updated full-year 2024 guidance.
Revenues for the full year are expected in the $9.50 billion-$9.58 billion band (previously $9.40 billion to $9.48 billion). This represents a year-over-year increase of 2.7%-3.5% (earlier 1.6%-2.5%). The Zacks Consensus Estimate is pegged at $9.45 billion.
Adjusted earnings per share is expected in the range of $8.80-$9.00 (previously $8.72 to $8.97). The Zacks Consensus Estimate for the metric is pegged at $8.85.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Quest Diagnostics has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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, Quest Diagnostics has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Quest Diagnostics (DGX) Up 6.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Quest Diagnostics (DGX - Free Report) . Shares have added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Quest Diagnostics 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.
Quest Diagnostics Beats Q2 Earnings, Raises 2024 View
Quest Diagnostics Incorporated’s second-quarter 2024 adjusted earnings per share of $2.35 beat the Zacks Consensus Estimate by 1.7%. The metric also exceeded the year-ago adjusted figure by 2.2%.
Certain one-time expenses, like the ones related to amortization expenses, certain restructuring and integration charges, other expenses and excess tax benefits associated with stock-based compensations, were excluded from the quarter’s adjusted figures.
GAAP earnings came in at $2.03 per share, down 1% from the last year’s comparable figure.
Quarterly Details
Revenues reported in the second quarter rose 2.5% year over year to $2.40 billion. The metric surpassed the Zacks Consensus Estimate by 0.5%.
Diagnostic Information Services revenues in the quarter were up 2.9% on a year-over-year basis to $2.33 billion. This figure compares with our model’s projection of $2.31 billion for the second quarter.
Volumes (measured by the number of requisitions) were up 1.1% year over year in the second quarter. Revenue per requisition increased 1.6% year over year.
Margins
The cost of services during the reported quarter was $1.59 billion, up 3% year over year. The gross profit came in at $804 million, up 1.5% year over year. The gross margin was 33.5%, reflecting a 33-basis point (bps) contraction from the year-ago figure.
SG&A expenses were $416 million in the quarter under review, similar to the second quarter of 2023. The adjusted operating margin of 16.2% represented a 10-bps expansion year over year.
Cash, Capital Structure and Solvency
Quest Diagnostics exited the second quarter of 2024 with cash and cash equivalents of $271 million compared with $474 million at the end of the first quarter. The cumulative net cash provided by operating activities at the end of the second quarter of 2024 was $514 million compared with $538 million in the comparable 2023 period.
The company has a five-year annualized dividend growth rate of 7.74%.
Guidance
Quest Diagnostics provided an updated full-year 2024 guidance.
Revenues for the full year are expected in the $9.50 billion-$9.58 billion band (previously $9.40 billion to $9.48 billion). This represents a year-over-year increase of 2.7%-3.5% (earlier 1.6%-2.5%). The Zacks Consensus Estimate is pegged at $9.45 billion.
Adjusted earnings per share is expected in the range of $8.80-$9.00 (previously $8.72 to $8.97). The Zacks Consensus Estimate for the metric is pegged at $8.85.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Quest Diagnostics has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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, Quest Diagnostics has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.