The 10-second takeaway
For the quarter ended Dec. 31 (Q4), DepoMed beat expectations on revenues and exceeded expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped significantly, and GAAP earnings per share contracted to a loss.
Gross margins increased, operating margins shrank, and net margins dropped.
DepoMed tallied revenue of $12.1 million. The five analysts polled by S&P Capital IQ anticipated net sales of $10.8 million on the same basis. GAAP reported sales were 42% lower than the prior-year quarter's $20.9 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 -$0.25. The five earnings estimates compiled by S&P Capital IQ predicted -$0.31 per share. GAAP EPS were -$0.25 for Q4 versus $0.03 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 94.9%, 30 basis points better than the prior-year quarter. Operating margin was -283.1%, 28,890 basis points worse than the prior-year quarter. Net margin was -291.6%, 29,980 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $12.1 million. On the bottom line, the average EPS estimate is -$0.25.
Next year's average estimate for revenue is $67.2 million. The average EPS estimate is -$0.69.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 237 members rating the stock outperform and 16 members rating it underperform. Among 50 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 47 give DepoMed a green thumbs-up, and three give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on DepoMed is buy, with an average price target of $7.67.
Over the decades, small-cap stocks like DepoMed have provided market-beating returns, provided they're value-priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.
- Add DepoMed to My Watchlist.
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.