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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