Please ensure Javascript is enabled for purposes of website accessibility

The Gory Details of Quest Diagnostics's Earnings Miss

By Seth Jayson - Updated Apr 10, 2017 at 1:52PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Just the facts, Fool.

Quest Diagnostics (NYSE: DGX) reported earnings on April 17. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Quest Diagnostics missed estimates on revenues and whiffed on earnings per share.

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

Margins contracted across the board.

Revenue details
Quest Diagnostics booked revenue of $1.79 billion. The 17 analysts polled by S&P Capital IQ predicted a top line of $1.86 billion on the same basis. GAAP reported sales were 7.7% lower than the prior-year quarter's $1.94 billion.

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 $0.89. The 21 earnings estimates compiled by S&P Capital IQ predicted $1.04 per share. Non-GAAP EPS of $0.89 for Q1 were 17% lower than the prior-year quarter's $1.07 per share. GAAP EPS of $0.85 for Q1 were 14% lower than the prior-year quarter's $0.99 per share.

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 38.9%, 360 basis points worse than the prior-year quarter. Operating margin was 12.7%, 380 basis points worse than the prior-year quarter. Net margin was 7.6%, 60 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.86 billion. On the bottom line, the average EPS estimate is $1.11.

Next year's average estimate for revenue is $7.36 billion. The average EPS estimate is $4.39.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 559 members out of 594 rating the stock outperform, and 35 members rating it underperform. Among 193 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 182 give Quest Diagnostics a green thumbs-up, and 11 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Quest Diagnostics is hold, with an average price target of $59.97.

Is Quest Diagnostics the best health care stock for you? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average health care logistics company. Click here for instant access to this free report.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Quest Diagnostics Incorporated Stock Quote
Quest Diagnostics Incorporated
DGX
$135.39 (-0.73%) $-1.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.