Endo Pharmaceuticals Earnings Preview

Endo Pharmaceuticals (Nasdaq: ENDP  ) beat estimates by $0.07 last quarter and investors are hoping it can beat them again. The company will unveil its latest earnings on Friday, Feb. 24. Endo Pharmaceutical is a specialty pharmaceutical company, engaged in the research, development, sale, and marketing of branded and generic prescription pharmaceuticals used to treat and manage pain.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Endo Pharmaceuticals as a buy. But with 65% of analysts rating it a buy, Endo Pharmaceuticals is still below the mean analyst rating of its nearest 10 competitors, which average 65.1% buys. Analysts don't like Endo Pharmaceuticals as much as competitor Par Pharmaceutical overall. Seven out of nine analysts rate Par Pharmaceutical Companies a buy compared to 13 of 20 for Endo Pharmaceuticals. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $803.3 million in revenue this quarter. That would represent a rise of 57.1% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $1.32 per share. Estimates range from $1.26 to $1.36.

What our community says:
CAPS All-Stars are strongly backing the stock, with 99.4% awarding it an "outperform" rating. The community at large is in line with the All-Stars, with 95.6% granting it a rating of "outperform." Fools are bullish on Endo Pharmaceuticals, though the message boards have been quiet lately with only two posts in the past 30 days. Even with a robust four out of five stars, Endo Pharmaceuticals' CAPS rating falls a little short of the community's upbeat outlook.

Management:
Endo Pharmaceuticals' income has fallen year over year by an average of 15.9% over the past five quarters. The company's gross margin shrank by 9.7 percentage points in the last quarter. Revenue rose 70.9% while cost of sales rose 125.6% to $302.2 million from a year earlier.

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. Endo Pharmaceuticals has experienced a drop in operating margin year over year for the last four quarters. Operating margin reflects the total sales revenue that the company retains after costs. See how Endo Pharmaceuticals has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

60.2%

61.0%

58.7%

66.8%

Operating Margin

18.5%

22.1%

21.6%

29.2%

Net Margin

5.4%

9.0%

10.0%

18.2%

One final thing: If you want to keep tabs on Endo Pharmaceuticals movements, and for more analysis on the company, make sure you add it to your Watchlist.

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Earnings estimates provided by Zacks.

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