A month has gone by since the last earnings report for Wright Medical Group N.V. . Shares have lost about 4.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is WMGI 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.
Recent Earnings
Wright Medical Group reported adjusted fourth-quarter earnings per share (EPS) of 10 cents, outpacing the Zacks Consensus Estimate by 150%. Earnings improved from a loss of 6 cents in the year-ago quarter.
Total revenues in the reported quarter were $218 million, reflecting 11.2% growth at constant currency. The figure beat the Zacks Consensus Estimate by 1.1%.
The surge in revenues was mainly backed by strong sales of U.S. Upper Extremities, led by the launch of Perform Reversed Glenoid. It also includes continued contribution from the company’s SIMPLICITI shoulder system.
However, international Lower Extremities sales continued to decline in the reported quarter.
Segment Details
The Upper Extremities business recorded net revenues (domestic and international) of $997.8 million, reflecting a year-over-year increase of 25.2%.
Lower Extremities business net revenues came in at $832.9 million, showing a year-over-year increase of 2.6%. However, international revenues in the Lower Extremities segment declined 3.8% to $161 million.
The Biologics segment raked in net revenues of $286 million, up 7.9% on a year-over-year basis.
The Sports Med &Other segment registered net sales of $6309 million, indicating a year-over-year increase of 5.1%.
Margins
Gross margin in the reported quarter came in at 78.8%, reflecting an expansion of 120 basis points (bps) on a year-over-year basis.
Operating expenses in the fourth quarter accounted for 64.5% of net revenues, down from 68.7% in the year-ago quarter. This can be attributed to continued leverage from incremental revenues.
Adjusted EBITDA from continuing operations was $38 million.
Financial Position
Wright Medical exited the fourth quarter with cash and cash equivalents of $167.7 million.
Guidance
Wright Medical expects full-year net sales of $800 million to $812 million. The figure is higher than the Zacks Consensus Estimate of $808.9 million. Per management, the primary growth drivers will be PERFORM Reversed shoulder, SIMPLICITI shoulder and the recently-completed acquisition of BLUEPRINT.
The company further expects adjusted loss per share of 16-23 cents in 2018. However, the range compares unfavorably with the Zacks Consensus Estimate of flat earnings.
The company expects full-year 2018 EBITDA margin expansion of 250-300 basis points. Management believes it is on track to achieve its goal of 20% EBITDA margin in the second half of 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to ten lower.
VGM Scores
At this time, WMGI has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. 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 B. 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
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, WMGI 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 Wright Medical (WMGI) Down 4.7% Since Its Last Earnings Report?
A month has gone by since the last earnings report for Wright Medical Group N.V. . Shares have lost about 4.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is WMGI 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.
Recent Earnings
Wright Medical Group reported adjusted fourth-quarter earnings per share (EPS) of 10 cents, outpacing the Zacks Consensus Estimate by 150%. Earnings improved from a loss of 6 cents in the year-ago quarter.
Total revenues in the reported quarter were $218 million, reflecting 11.2% growth at constant currency. The figure beat the Zacks Consensus Estimate by 1.1%.
The surge in revenues was mainly backed by strong sales of U.S. Upper Extremities, led by the launch of Perform Reversed Glenoid. It also includes continued contribution from the company’s SIMPLICITI shoulder system.
However, international Lower Extremities sales continued to decline in the reported quarter.
Segment Details
The Upper Extremities business recorded net revenues (domestic and international) of $997.8 million, reflecting a year-over-year increase of 25.2%.
Lower Extremities business net revenues came in at $832.9 million, showing a year-over-year increase of 2.6%. However, international revenues in the Lower Extremities segment declined 3.8% to $161 million.
The Biologics segment raked in net revenues of $286 million, up 7.9% on a year-over-year basis.
The Sports Med &Other segment registered net sales of $6309 million, indicating a year-over-year increase of 5.1%.
Margins
Gross margin in the reported quarter came in at 78.8%, reflecting an expansion of 120 basis points (bps) on a year-over-year basis.
Operating expenses in the fourth quarter accounted for 64.5% of net revenues, down from 68.7% in the year-ago quarter. This can be attributed to continued leverage from incremental revenues.
Adjusted EBITDA from continuing operations was $38 million.
Financial Position
Wright Medical exited the fourth quarter with cash and cash equivalents of $167.7 million.
Guidance
Wright Medical expects full-year net sales of $800 million to $812 million. The figure is higher than the Zacks Consensus Estimate of $808.9 million. Per management, the primary growth drivers will be PERFORM Reversed shoulder, SIMPLICITI shoulder and the recently-completed acquisition of BLUEPRINT.
The company further expects adjusted loss per share of 16-23 cents in 2018. However, the range compares unfavorably with the Zacks Consensus Estimate of flat earnings.
The company expects full-year 2018 EBITDA margin expansion of 250-300 basis points. Management believes it is on track to achieve its goal of 20% EBITDA margin in the second half of 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to ten lower.
Wright Medical Group N.V. Price and Consensus
Wright Medical Group N.V. Price and Consensus | Wright Medical Group N.V. Quote
VGM Scores
At this time, WMGI has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. 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 B. 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
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, WMGI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.