The 10-second takeaway
For the quarter ended June 30 (Q2), Covance met expectations on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue increased. Non-GAAP earnings per share expanded significantly. GAAP earnings per share increased.
Gross margins contracted, operating margins dropped, net margins expanded.
Covance tallied revenue of $592.3 million. The 14 analysts polled by S&P Capital IQ expected to see a top line of $586.9 million on the same basis. GAAP reported sales were 19% higher than the prior-year quarter's $542.8 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 $0.78. The 15 earnings estimates compiled by S&P Capital IQ averaged $0.77 per share. Non-GAAP EPS of $0.78 for Q2 were 20% higher than the prior-year quarter's $0.65 per share. GAAP EPS were $0.72 for Q2 against -$0.23 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 26.9%, 170 basis points worse than the prior-year quarter. Operating margin was 8.0%, 20 basis points worse than the prior-year quarter. Net margin was 6.4%, 870 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $591.1 million. On the bottom line, the average EPS estimate is $0.79.
Next year's average estimate for revenue is $2.36 billion. The average EPS estimate is $3.13.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 312 members out of 321 rating the stock outperform, and nine members rating it underperform. Among 112 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 110 give Covance a green thumbs-up, and two 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 $74.59.
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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.