Egads, was that ever bad!
In last week's Foolish Forecast for Q2 earnings at LCA-Vision
And how. Reviewing Tuesday's results, it appears that the analysts ultimately weren't pessimistic enough. The numbers were simply abysmal:
- Sales rose only 6% (or 16%, based on management's restatement of Q2 2006 results).
- Procedure volume increased an anemic 3%, with all of the growth coming from new store openings. Existing stores dragged down the final number with an 8% drop in same-store sales.
- Per-share profits fell by a penny to $0.36.
Little wonder that Straus pronounced himself "not satisfied" with these numbers. They could only please a short seller. (In fact, with the share price down 21% in 48 hours, they probably did please the shorts.)
Granted, Straus predicted that LCA will "re-accelerate earnings and revenue growth in the second half of this year." But we hear that refrain all too often from companies struggling through a bad quarter, whether it's Nissan
The good news
Even the good news was bad at LCA this quarter. Straus pointed out that while profits were down, cash flow was up 14%. Good news? Not really. The 14% number was for year-to-date cash flow, and it relied heavily on last quarter's 17% growth. In Q2, cash flow actually performed worse than GAAP profits -- down 35% year over year from last year's $8 million.
The not-yet news
Putting it all together, LCA decided to lower its forward earnings guidance by roughly 7%, to a midpoint of $1.95 per share. (The last time we checked, the midpoint was $2.10.) How confident should you be that LCA will meet its latest and less-than-greatest target?
Well, LCA has earned $0.90 per share already, but the year's more than half over. So unless management fulfills its promise to reenergize growth next quarter, I'd put the likelihood of hitting the latest earnings target somewhere south of 50%.
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