Thoratec Earnings Preview

Thoratec (Nasdaq: THOR  ) will try to beat its earnings estimates for the third consecutive quarter. The company will unveil its latest earnings on Monday, Jan. 30. Thoratec Laboratories develops, manufactures and markets proprietary medical devices used for circulatory support.

What analysts say:

• Buy, sell, or hold?: Analysts think investors should stand pat on Thoratec with 10 of 17 analysts rating it hold. Analysts don't like Thoratec as much as competitor Heartware, International overall. Six out of 11 analysts rate Heartware, International a buy compared to seven of 17 for Thoratec.
• Revenue Forecasts: On average, analysts predict $107.4 million in revenue this quarter. That would represent a rise of 10.1% from the year-ago quarter.
• Wall Street Earnings Expectations: The average analyst estimate is earnings of 30 per share. Estimates range from $0.27 to $0.33.

What our community says:
CAPS All-Stars are enthusiastically backing the stock, with 86.7% giving it an "outperform" rating. Most of the community concurs with the All-Stars, with 87.3% granting it a rating of "outperform." Fools are gung-ho about Thoratec, though the message boards have been quiet lately with only 92 posts in the past 30 days. Despite the majority sentiment in favor of Thoratec, the stock has a middling CAPS rating of three out of five stars.

Management:
Thoratec's profit has risen year-over-year by an average of 26.7% over the past five quarters. The company's revenue has now risen for two straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. For four quarters in a row, the company has seen increases in net margins year-over-year. Net margins reflect what percentage of revenue becomes profit. See how Thoratec has been doing for the last four quarters:

Quarter	Q3	Q2	Q1	Q4
Gross Margin	69.9%	70.9%	70.1%	66.3%
Operating Margin	27.0%	30.8%	27.2%	22.9%
Net Margin	17.5%	19.6%	16.5%	10.7%

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