The 10-second takeaway
For the quarter ended March 29 (Q2), Covidien met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share grew. GAAP earnings per share shrank.
Margins contracted across the board.
Covidien reported revenue of $3.10 billion. The 18 analysts polled by S&P Capital IQ wanted to see sales of $3.12 billion on the same basis. GAAP reported sales were 5.3% higher than the prior-year quarter's $2.95 billion.
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 $1.12. The 21 earnings estimates compiled by S&P Capital IQ predicted $1.09 per share. Non-GAAP EPS of $1.12 for Q2 were 6.7% higher than the prior-year quarter's $1.05 per share. (The prior-year quarter included $0.01 per share in earnings from discontinued operations.) GAAP EPS of $0.93 for Q2 were 8.8% lower than the prior-year quarter's $1.02 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 57.6%, 50 basis points worse than the prior-year quarter. Operating margin was 21.2%, 20 basis points worse than the prior-year quarter. Net margin was 14.1%, 280 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $3.19 billion. On the bottom line, the average EPS estimate is $1.15.
Next year's average estimate for revenue is $12.56 billion. The average EPS estimate is $4.49.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Covidien is outperform, with an average price target of $70.15.
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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. The Motley Fool recommends Covidien. 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.