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Alberto Abaterusso
Alberto Abaterusso
Articles (1518) 

Stryker Corp's Profit Skyrockets

Healthcare, Biogen and Allergan also released earnings yesterday

January 30, 2019 | About:

These health care large caps released earnings on Tuesday.

Shares of HCA Healthcare Inc. (NYSE:HCA) jumped 4.78% to $138.03 on Tuesday after the Nashville, Tennessee-based medical care company beat analysts on both non-GAAP earnings per share by 44 cents and GAAP earnings per share by 41 cents for the last quarter of 2018. HCA Healthcare closed the trimester posting non-GAAP earnings per share of $2.99, representing a 131.5% increase from the prior-year quarter and GAAP earnings per share of $3.01, reflecting 130% growth year-over-year.

The company also beat consensus on revenue for the last trimester of 2018. In fact, HCA Healthcare posted revenue of $12.2 billion, which was a 6.1% increase year-over-year, versus a consensus of $12.04 billion.

In 2018 the company produced cash flow from operations of $6.761 billion, which was a 24.6% increase from 2017.

Further, the board of directors of HCA Healthcare has decided to implement another $2 billion buyback program and to hike the quarterly dividend by 14.3% to 40 cents per ordinary share from the previous distribution. On March 29, HCA Healthcare will pay the next cash quarterly dividend to its shareholders of record March 1. The ex-dividend date is scheduled for Feb. 28. Following the increase, the forward dividend yield is 1.06% versus an industry median of 1.99% as of Jan. 29.

In addition, the company has guided for revenues between $50.5 billion and $51.5 billion, earnings per share between $9.60 and $10.20, non-GAAP Ebitda of $9.35 billion to $9.75 billion and capital expenditures of about $3.7 billion for full-year 2019.

The share price has climbed 36% for the 52 weeks through Jan. 29 and is now trading above the 200-, 100- and 50-day simple moving average lines. The share price at close Tuesday was 48.4% below the 52-week low of $93.03 and 6.8% off the 52-week high of $147.42. The market capitalization of the stock is approximately $47.5 billion.

The stock has a price-earnings ratio of 15.42 versus an industry median of 27.31 and a price-sales ratio of 1.08 versus an industry median of 1.7.

GuruFocus has assigned to HCA Healthcare a financial strength rating of 4 out of 10 and a profitability and growth rating of 8 out of 10.

The recommendation rating is 2 out of 5, and the average target price is $149.17 per share.

Allergan Plc (NYSE:AGN) tumbled 8.55% to $145.12 per share on Tuesday after the Dublin, Ireland-based drug producer missed consensus on fourth-quarter GAAP earnings per share by $12.39, having posted a loss of $12.83. Instead, the non-GAAP earnings per share were $4.29 versus a consensus for $4.15. Compared to the same trimester of 2017, the non-GAAP earnings per share declined nearly 12%.

Allergan produced these earnings results on revenue of $4.08 billion, which was nearly 6% lower than the prior-year quarter. The company beat consensus on revenues by $70 million. The top line was shared between the following segments.

Sales from the U.S. Specialized Therapeutics segment were $1.81 billion for a 3.9% downside from 2017, sales from the U.S. General Medicine segment went down 8.4% year-over-year to about $1.4 billion and sales from the International segment were $870.2 million, for a 5% downside from 2017.

Allergan generated a cash flow of $5.64 billion from full year 2018 operations which, compared to the entire year of 2017, represented a 7.2% decline.

For full-year 2019, the health care company has guided for revenue of $15 billion to $15.3 billion, non-GAAP earnings per share of $16.36 or more, GAAP earnings per share of $1.14 or more and operating cash flow of $5 billion to $5.5 billion.

The share price declined 19% for the 52 weeks through Jan. 29 and is now trading below the 200-, 100- and 50-day SMA lines. The share price at close Tuesday falls in a 52-week range of $125.84 to $197. The market capitalization is $48.95 billion.

The price-book ratio is 0.69 versus an industry median of 2.64, the price-sales ratio is 3.04 versus an industry median of 3.1 and the price-earnings ratio is 21.99 versus an industry median of 23.77.

Allergan is a dividend payer. The company will pay a 74-cent cash quarterly dividend per ordinary share, which represents a 2.8% increase from the previous quarter, on March 15 to its shareholders of record Feb. 15. The ex-dividend date is scheduled for Feb. 14. The forward dividend yield is 1.87% versus an industry median of 1.66 as of Jan. 29.

GuruFocus has assigned to Allergan a financial strength rating of 5 out of 10 and a profitability and growth rating of 5 out of 10.

The recommendation rating is 2 out of 5, and the average target price is $202.71 per share.

Biogen Inc. (NASDAQ:BIIB) increased 1.35% to $334.48 per share following the earnings announcement for the last trimester of 2018. The Cambridge, Massachusetts-based biotechnology company has beaten non-GAAP earnings per share by 26 cents with $6.99 and missed GAAP earnings per share by $1.44 with $4.73. The bottom line significantly improved from 2017.

Biogen posted a 6.6% increase in revenue to $3.53 billion and beat consensus by $140 million. Product sales increased 4.2% to almost $2.83 billion, Anti-CD20 therapeutic programs revenues soared nearly 29% to almost $535 million and other revenues decreased 7.7% to $165.7 million. Biogen also reported cash flow generation of $6.2 billion.

For full-year 2019, Biogen has guided that revenues will range between $13.6 billion and $13.8 billion, GAAP earnings per share will range between $26.65 and $27.65 and non-GAAP earnings per share will range between $28 and $29.

The stock’s price lost 4% over the past year through Tuesday. The share price is trading above the 200-, 100- and 50-day SMA lines, 34.2% off the 52-week low of $249.17 and 16.2% below the 52-week high of $388.67. The stock has a market capitalization of approximately $67.39 billion.

The price-book ratio is 4.9 versus an industry median of 4.1, the price-sales ratio is 5.26 versus an industry median of 4.12 and the price-earnings ratio is 21.59 versus an industry median of 28.79.

Biogen is not paying a dividend.

GuruFocus has assigned to Allergan a financial strength rating of 7 out of 10 and a profitability and growth rating of 10 out of 10.

The recommendation rating is 2 out of 5, and the average target price is $385.96 per share.

Stryker Corp. (NYSE:SYK) issued fourth-quarter results on Tuesday after the closing bell. The Kalamazoo, Michigan-based medical devices producer issued non-GAAP earnings per share of $2.18 versus consensus of $2.15, GAAP earnings per share of $5.44 versus consensus of $1.8 and revenue of $3.8 billion compared to consensus for $3.74 billion.

GAAP earnings per share increased 924.2%, non-GAAP earnings per share rose 11.2% and revenue went up 9.5% year-over-year.

Stryker Corp. generated $2.61 billion cash flow from its full-year 2018 operations, a 67.4% advance from 2017.

The company has also produced non-GAAP earnings per share of $1.8 to $1.85 for the first trimester and of $8 to $8.2 for full-year 2019. Regarding the top line of the income statement for full fiscal 2019, Stryker Corp. forecasts that total revenues will grow at a 6.5-7.5% rate from 2018.

The share price has decreased 2% to $161.1 for the 52 weeks through Jan. 29 and is now trading below the 200-, 100- and 50-day simple moving average lines. The 52-week range is $144.75 to $179.84. The market capitalization of the stock is approximately $60.27 billion.

The stock has a price-book ratio of 6.11 versus an industry median of 3.06, a price-earnings ratio of 49.71 versus an industry median of 30.17 and a price-sales ratio of 4.62 versus an industry median of 3.15.

The stock has a forward dividend yield of 1.29% compared to an industry median of 1.48%.

GuruFocus has assigned to Stryker Corp. a financial strength rating of 6 out of 10 and a profitability and growth rating of 8 out of 10.

The recommendation rating is 2 out of 5, and the average target price is $186.18 per share.

Disclosure: I have no positions in any securities mentioned.

About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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