After it reported second-quarter results, shares of Merit Medical Systems (NASDAQ:MMSI), a manufacturer of disposable medical devices, had slumped 26% as of 11:15 a.m. EST on Friday.
Here's a review of the key numbers from the quarter:
- Revenue grew 14% to $255.5 million. That was slightly behind what Wall Street had expected.
- Core revenue grew 9.6%.
- GAAP (generally accepted accounting principles) gross margin slipped 70 basis points to 43.8%.
- GAAP earnings per share (EPS) fell 43% to $0.12.
- Non-GAAP net income per share dropped by a penny to $0.42. That was behind the $0.50 that Wall Street was looking for.
The lower-than-hoped-for results caused management to dial back its full-year guidance:
|Metric||Prior Guidance||Updated Guidance|
|Sales||$1,011 million to $1,030 million||$1,007 million to $1,029 million|
|GAAP EPS||$1.02 to $1.13||$0.62 to $0.84|
|Non-GAAP EPS||$1.97 to $2.08||$1.74 to $1.97|
Traders are mauling the stock in response to the quarterly miss and downbeat guidance.
Merit's CEO, Fred Lampropoulos, did his best to paint a rosy picture for the future and stressed that the company is "not changing our 2020 forecast."
However, since the stock was trading for nearly 70 times trailing earnings prior to today's release, it is understandable that shares are falling so hard today.
The good news is that shares are currently trading hands for about 17 times 2020 earnings, so shares could be a bargain today -- if the company can get its growth engine back on track.