Omnicare Earnings Preview

Omnicare (NYSE: OCR  ) will try to beat its earnings estimates for the third consecutive quarter. The company will unveil its latest earnings on Thursday, Feb. 23. Omnicare is a geriatric pharmaceutical services company that provides pharmaceuticals and related ancillary pharmacy services to long-term health-care institutions.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Omnicare as a buy. But with 55.6% of analysts rating it a buy, Omnicare is still below the mean analyst rating of its nearest 10 competitors, which average 62.1% buys. Analysts like Omnicare better than competitor Tenet Healthcare overall. Seven out of 17 analysts rate Tenet Healthcare a buy compared to five of nine for Omnicare. Analysts haven't adjusted their rating of Omnicare for the past three months.
  • Revenue forecasts: On average, analysts predict $1.52 billion in revenue this quarter. That would represent a decline of 2.6% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.56 per share. Estimates range from $0.54 to $0.57.

What our community says:
CAPS All-Stars are strongly supporting the stock, with 96.5% granting it an "outperform" rating. Most of the community is in line with the All-Stars, with 91.8% giving it a rating of "outperform." Despite the majority sentiment in favor of Omnicare, the stock has a middling CAPS rating of three out of five stars.

Management:
A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases.

Now, a look at how efficient management has been at running the business. Margins illustrate how efficiently a company captures portions of sales dollars. In the last two quarters, Omnicare experienced a boost in operating margin year over year. Operating margin reflects the total sales revenue that the company retains after costs. Here are Omnicare's reported margins for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

22.4%

21.6%

22.1%

22.2%

Operating Margin

7.6%

6.3%

7.5%

(2.4%)

Net Margin

1.8%

(0.1%)

1.9%

(4.2%)

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Earnings estimates provided by Zacks.

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