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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