Covidien Beats on Both Top and Bottom Lines

Covidien (NYSE: COV  ) reported earnings on April 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 30 (Q2), Covidien beat slightly on revenues and beat slightly on earnings per share.

Compared with the prior-year quarter, revenue increased and GAAP earnings per share grew.

Gross margins expanded, operating margins shrank, net margins grew.

Revenue details
Covidien logged revenue of $2.95 billion. The 16 analysts polled by S&P Capital IQ expected to see revenue of $2.90 billion on the same basis. GAAP reported sales were 5.2% higher than the prior-year quarter's $2.80 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.05. The 19 earnings estimates compiled by S&P Capital IQ predicted $1.03 per share. GAAP EPS of $1.02 for Q2 were 12% higher than the prior-year quarter's $0.91 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 57.9%, 60 basis points better than the prior-year quarter. Operating margin was 21.2%, 100 basis points worse than the prior-year quarter. Net margin was 16.9%, 70 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $3.01 billion. On the bottom line, the average EPS estimate is $1.06.

Next year's average estimate for revenue is $11.84 billion. The average EPS estimate is $4.29.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Covidien is buy, with an average price target of $59.99.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings. He is the co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Covidien. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On April 28, 2012, at 1:48 PM, DoctorLewis4 wrote:

    COV is a very well run company that looks to take advantage of demographic trends going forward. For long term investors this looks very good.

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