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ResMed (RMD) Up 3.6% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for ResMed Inc. (RMD - Free Report) . Shares have added about 3.6% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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 catalysts.
Recent Earnings
ResMed Inc. announced second-quarter fiscal 2017 adjusted earnings per share (EPS) of $0.73, consistent with the prior-year quarter level. However, the quarter’s earnings surpassed the Zacks Consensus Estimate by 4.3%.
Including one-time items, ResMed reported EPS of $0.54 in the quarter, down 20.5% year over year.
Revenues in Details
Revenues in the reported quarter increased 16.6% year over year (up 18% at constant exchange rate or CER) to $530.4 million. The figure also surpassed the Zacks Consensus Estimate of $522 million.
On a geographic basis, revenues in the Americas rose 21% year over year to $326.8 million, primarily on the back of Software-as-a-Service revenues from Brightree and 13% growth in device sales. Excluding Brightree’s contribution, revenues in the Americas were up 9% to $293.0 million. On the other hand, sales in the combined EMEA and APAC region improved 13% at CER to $203.6 million.
Adjusted gross margin expanded 17 basis points (bps) year over year to 58.3% in the reported quarter. Selling, general and administrative expenses were up 17.8% year over year to $139.3 million while there was a 31.8% increase in Research and Development expenses to $38.1 million. This led to a 20.5% rise in adjusted operating expenses, which amounted to $177.4 million. Accordingly, adjusted operating margin in the quarter contracted 92 bps to 24.8%.
Financial Update
ResMed exited second-quarter 2017 with cash and cash equivalents of $788.1 million, compared with $731.4 million in the first quarter.
Year to date, the company generated $206.1 million of cash flow from operations, down 26.4% from the year-ago figure, displaying weak underlying earnings and a decline in net working capital balances.
Concurrent to its second-quarter earnings release, ResMed announced a quarterly dividend of $0.33 per share, representing a 10% increase from the company’s prior payout. The dividend will be paid on Mar 16, to shareholders of record as on Feb 9.
During the reported quarter, ResMed did not repurchase any shares, in sync with its decision of a temporary suspension of the buy-back program due to the company’s recent acquisition.
Guidance
The company reiterated its gross margin guidance at the range of 58%–60% for the rest of fiscal 2017, considering the current exchange rates and trends in product and geographic mix.
Further, management expects SG&A expenses, as a percentage of revenues, to be in the band of 27%–28%. R&D expenses, as a percentage of revenues, are projected within 7%–8% for fiscal 2017. This reflects marketing expenses associated with product launches along with the ongoing legal expenses.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
At this time, ResMed's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. Charting a somewhat similar path, 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 aggregte VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.
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ResMed (RMD) Up 3.6% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for ResMed Inc. (RMD - Free Report) . Shares have added about 3.6% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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 catalysts.
Recent Earnings
ResMed Inc. announced second-quarter fiscal 2017 adjusted earnings per share (EPS) of $0.73, consistent with the prior-year quarter level. However, the quarter’s earnings surpassed the Zacks Consensus Estimate by 4.3%.
Including one-time items, ResMed reported EPS of $0.54 in the quarter, down 20.5% year over year.
Revenues in Details
Revenues in the reported quarter increased 16.6% year over year (up 18% at constant exchange rate or CER) to $530.4 million. The figure also surpassed the Zacks Consensus Estimate of $522 million.
On a geographic basis, revenues in the Americas rose 21% year over year to $326.8 million, primarily on the back of Software-as-a-Service revenues from Brightree and 13% growth in device sales. Excluding Brightree’s contribution, revenues in the Americas were up 9% to $293.0 million. On the other hand, sales in the combined EMEA and APAC region improved 13% at CER to $203.6 million.
Adjusted gross margin expanded 17 basis points (bps) year over year to 58.3% in the reported quarter. Selling, general and administrative expenses were up 17.8% year over year to $139.3 million while there was a 31.8% increase in Research and Development expenses to $38.1 million. This led to a 20.5% rise in adjusted operating expenses, which amounted to $177.4 million. Accordingly, adjusted operating margin in the quarter contracted 92 bps to 24.8%.
Financial Update
ResMed exited second-quarter 2017 with cash and cash equivalents of $788.1 million, compared with $731.4 million in the first quarter.
Year to date, the company generated $206.1 million of cash flow from operations, down 26.4% from the year-ago figure, displaying weak underlying earnings and a decline in net working capital balances.
Concurrent to its second-quarter earnings release, ResMed announced a quarterly dividend of $0.33 per share, representing a 10% increase from the company’s prior payout. The dividend will be paid on Mar 16, to shareholders of record as on Feb 9.
During the reported quarter, ResMed did not repurchase any shares, in sync with its decision of a temporary suspension of the buy-back program due to the company’s recent acquisition.
Guidance
The company reiterated its gross margin guidance at the range of 58%–60% for the rest of fiscal 2017, considering the current exchange rates and trends in product and geographic mix.
Further, management expects SG&A expenses, as a percentage of revenues, to be in the band of 27%–28%. R&D expenses, as a percentage of revenues, are projected within 7%–8% for fiscal 2017. This reflects marketing expenses associated with product launches along with the ongoing legal expenses.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
ResMed Inc. Price and Consensus
ResMed Inc. Price and Consensus | ResMed Inc. Quote
VGM Scores
At this time, ResMed's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. Charting a somewhat similar path, 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 aggregte VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.