The 10-second takeaway
For the quarter ended Nov. 30 (Q1), Zep missed slightly on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped slightly, and earnings per share shrank significantly.
Margins dropped across the board.
Zep booked revenue of $153 million. The two analysts polled by S&P Capital IQ looked for revenue of $156 million. Sales were 2.5% lower than the prior-year quarter's $157 million
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
EPS came in at $0.16. The three earnings estimates compiled by S&P Capital IQ averaged $0.16 per share. GAAP EPS of $0.16 for Q1 were 28% lower than the prior-year quarter's $0.22 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 47.5%, 270 basis points worse than the prior-year quarter. Operating margin was 4.8%, 240 basis points worse than the prior-year quarter. Net margin was 2.3%, 80 basis points worse than the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods.
What does the future hold?
Next quarter's average estimate for revenue is $150 million. On the bottom line, the average EPS estimate is $0.16.
Next year's average estimate for revenue is $676 million. The average EPS estimate is $1.00.
The stock has a five-star rating out of five) at Motley Fool CAPS, with 45 members out of 50 rating the stock outperform, and five members rating it underperform. Among eight CAPS All-Star picks (recommendations by the highest-ranked CAPS members), seven give Zep a green thumbs-up, and one give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Zep is outperform, with an average price target of $18.00.
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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 here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.