Perrigo Company (PRGO): Zacks Rank Buy

• By Alex Kolb
• On 1:00 am EST, Thursday November 5, 2009

Perrigo Company (NasdaqGS: PRGO - News) recently reported record fiscal first-quarter earnings of 65 cents per share, topping last year's 41 cents and exceeding the Zacks Consensus Estimate of 47 cents. Revenue jumped 16% year-over-year. The company hiked its fiscal year guidance to a range of $2.35 - $2.45 per share from a previous range of $2.00 - $2.12.

Company Description

Perrigo Company is global healthcare supplier that develops, manufactures and distributes OTC and generic prescription (Rx) pharmaceuticals, nutritional products, active pharmaceutical ingredients (API) and pharmaceutical and medical diagnostic products. The company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. Perrigo's primary markets and locations of manufacturing and logistics operations are in the United States, Israel, Mexico and the United Kingdom.

Record Results

The company recently reported record fiscal first-quarter earnings of 65 cents per share, topping last year's 41 cents and exceeding the Zacks Consensus Estimate of 47 cents. Revenue jumped 16% year-over-year.

Management said Perrigo delivered record earnings for the quarter, with strong performance across all business segments. Cash flow from operations continued to be strong as the company generated a record $38 million during a period when it was preparing for the cough, cold, flu season.

Bullish Forecasts

The company hiked its fiscal year guidance to a range of $2.35 - $2.45 per share from a previous range of $2.00 - $2.12.

During the past week, The Zacks Consensus Estimate soared to $2.39 from $2.10 for the year ending June 2010. For the following year, analysts polled by Zacks are calling for earnings of $2.51 per share, up from $2.34 over the past week.

Higher Income

Perrigo declared a quarterly dividend of $0.0625 per share, noting that it is payable on December 15 to shareholders of record on November 27. The dividend represents a 12% boost.

Perrigo pays an industry-leading dividend yield of 0.6%.

Leading the Industry

The company offers a return on equity (ROE) of 20%, surpassing the industry average if 15%. Perrigo's net profit margin of 7% tops the industry average of 2%. Earnings per share are expected to grow 16% over the next 3 - 5 years, beating the industry average of 15%.

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