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OMNOVA Solutions Misses Where it Counts

By Seth Jayson - Updated Apr 10, 2017 at 1:56PM

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Just the facts, Fool.

OMNOVA Solutions (NYSE: OMN) reported earnings on April 3. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Feb. 28 (Q1), OMNOVA Solutions beat expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue dropped. Non-GAAP earnings per share dropped significantly. GAAP earnings per share shrank to zero.

Margins contracted across the board.

Revenue details
OMNOVA Solutions reported revenue of $251.7 million. The three analysts polled by S&P Capital IQ expected revenue of $245.3 million on the same basis. GAAP reported sales were 8.8% lower than the prior-year quarter's $275.9 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.03. The four earnings estimates compiled by S&P Capital IQ anticipated $0.10 per share. Non-GAAP EPS of $0.03 for Q1 were 86% lower than the prior-year quarter's $0.22 per share. (The prior-year quarter included $0.06 per share in earnings from discontinued operations.) GAAP EPS dropped to zero from the prior-year quarter's $0.29.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 19.5%, 260 basis points worse than the prior-year quarter. Operating margin was 4.1%, 440 basis points worse than the prior-year quarter. Net margin was -0.1%, 500 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $302.0 million. On the bottom line, the average EPS estimate is $0.17.

Next year's average estimate for revenue is $1.13 billion. The average EPS estimate is $0.68.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 144 members out of 169 rating the stock outperform, and 25 members rating it underperform. Among 31 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 26 give OMNOVA Solutions a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on OMNOVA Solutions is outperform, with an average price target of $10.33.

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