The 10-second takeaway
For the quarter ended June 30 (Q2), Covance met expectations on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue increased. Non-GAAP earnings per share expanded significantly. GAAP earnings per share increased.
Gross margins contracted, operating margins dropped, net margins expanded.
Covance tallied revenue of $592.3 million. The 14 analysts polled by S&P Capital IQ expected to see a top line of $586.9 million on the same basis. GAAP reported sales were 19% higher than the prior-year quarter's $542.8 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.78. The 15 earnings estimates compiled by S&P Capital IQ averaged $0.77 per share. Non-GAAP EPS of $0.78 for Q2 were 20% higher than the prior-year quarter's $0.65 per share. GAAP EPS were $0.72 for Q2 against -$0.23 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 26.9%, 170 basis points worse than the prior-year quarter. Operating margin was 8.0%, 20 basis points worse than the prior-year quarter. Net margin was 6.4%, 870 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $591.1 million. On the bottom line, the average EPS estimate is $0.79.
Next year's average estimate for revenue is $2.36 billion. The average EPS estimate is $3.13.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 312 members out of 321 rating the stock outperform, and nine members rating it underperform. Among 112 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 110 give Covance a green thumbs-up, and two give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Covance is outperform, with an average price target of $74.59.
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