The 10-second takeaway
For the quarter ended March 31 (Q1), Covance beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share expanded significantly. GAAP earnings per share grew significantly.
Gross margins grew, operating margins dropped, net margins increased.
Covance reported revenue of $580.2 million. The 11 analysts polled by S&P Capital IQ predicted revenue of $569.3 million on the same basis. GAAP reported sales were 19% higher than the prior-year quarter's $530.8 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 $0.75. The 16 earnings estimates compiled by S&P Capital IQ predicted $0.72 per share. Non-GAAP EPS of $0.75 for Q1 were 25% higher than the prior-year quarter's $0.60 per share. GAAP EPS of $0.86 for Q1 were 43% higher than the prior-year quarter's $0.60 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 35.2%, 610 basis points better than the prior-year quarter. Operating margin was 7.6%, 110 basis points worse than the prior-year quarter. Net margin was 7.6%, 90 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $579.7 million. On the bottom line, the average EPS estimate is $0.74.
Next year's average estimate for revenue is $2.34 billion. The average EPS estimate is $3.05.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 311 members out of 319 rating the stock outperform, and eight members rating it underperform. Among 110 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 109 give Covance a green thumbs-up, and one give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Covance is outperform, with an average price target of $69.38.
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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 has no position in any of the stocks mentioned. 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.