The 10-second takeaway
For the quarter ended March 31 (Q1), ArthroCare beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share grew significantly.
Gross margins shrank, operating margins were steady, net margins dropped.
ArthroCare booked revenue of $92.9 million. The five analysts polled by S&P Capital IQ predicted revenue of $88.2 million on the same basis. GAAP reported sales were 5.6% higher than the prior-year quarter's $87.9 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 $0.46. The five earnings estimates compiled by S&P Capital IQ forecast $0.34 per share. GAAP EPS of $0.43 for Q1 were 19% higher than the prior-year quarter's $0.36 per share. (The prior-year quarter included $0.01 per share in earnings from discontinued operations.)
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 71.3%, 60 basis points worse than the prior-year quarter. Operating margin was 18.9%, about the same as the prior-year quarter. Net margin was 14.0%, 50 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $92.5 million. On the bottom line, the average EPS estimate is $0.38.
Next year's average estimate for revenue is $361.4 million. The average EPS estimate is $1.38.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 136 members out of 272 rating the stock outperform, and 136 members rating it underperform. Among 107 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 43 give ArthroCare a green thumbs-up, and 64 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ArthroCare is outperform, with an average price target of $31.00.
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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.