The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Cerner beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly, and GAAP earnings per share improved significantly.
Gross margins contracted, operating margins expanded, and net margins increased.
Cerner recorded revenue of $615.6 million. The 19 analysts polled by S&P Capital IQ expected net sales of $588.7 million. Sales were 23% higher than the prior-year quarter's $500.2 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.55. The 22 earnings estimates compiled by S&P Capital IQ predicted $0.52 per share on the same basis. GAAP EPS of $0.52 for Q4 were 27% higher than the prior-year quarter's $0.41 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 78.6%, 240 basis points worse than the prior-year quarter. Operating margin was 22.4%, 170 basis points better than the prior-year quarter. Net margin was 14.8%, 70 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $577.2 million. On the bottom line, the average EPS estimate is $0.50.
Next year's average estimate for revenue is $2.49 billion. The average EPS estimate is $2.26.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 373 members rating the stock outperform and 42 members rating it underperform. Among 132 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 120 give Cerner a green thumbs-up, and 12 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cerner is outperform, with an average price target of $69.17.
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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.