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Luminex (LMNX) Up 13.4% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for Luminex (LMNX). Shares have added about 13.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Luminex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Luminex Loss Wider Than Estimates in Q3, Assay Revenues Down

Luminex reported third-quarter 2019 loss of 12 cents per share, significantly wider than the Zacks Consensus Estimate of 3 cents per share. Notably, the company reported earnings of 4 cents per share in the year-ago quarter.

Revenues in Detail

Revenues came in at $78.7 million, missing the Zacks Consensus Estimate by 3.9%. However, the top line improved 8.6% on a year-over-year basis.

Total sample-to-answer franchise revenues grew 27% from the prior-year quarter.

Segmental Analysis

System Sales

Revenues at this segment totaled $15.2 million, surging 52% from the year-ago quarter.

Consumable Sales

This segment accounted for $13.4 million of revenues, up 14.9% year over year.

Royalty Revenues

Royalty revenues totaled $12.9 million, up 7.5% on a year-over-year basis.

Assay Revenues

This segment reported revenues worth $29.5 million, down 12.7% on a year-over-year basis.

Service Revenues

Revenues in the segment amounted to $5.3 million, up 77.4% from the year-ago quarter.

Other

Other revenues came in at $2.3 million, up 16.2% from a year ago.

Business Details

Per management, this Texas-based company placed 31 sample-to-answer molecular systems under contract during the third quarter. Active sample-to-answer customers totaled 650 in the quarter under review.

Financial Update

As of Sep 30, 2019, cash and cash equivalents totaled $66.1 million, down 4.4% sequentially.

Cash flow from operating activities for the three months ended Sep 30, 2019, came in at $9.4 million, down 37.7% from the year-ago quarter.

Margins

Gross profit in the reported quarter was $41.8 million, down 5.5% year over year. Gross margin was 53.2%, contracting 790 bps.

Research and development expenses totaled $13.3 million, up 10.6% year over year. Selling, general and administrative expenses in the third quarter were $31.4 million, up 19.4% year over year. Total operating expenses amounted to $47.6 million, up 17.4% from the year-ago reported figure.

The company incurred operating loss of $5.7 million, against the year-ago quarter’s operating income of $3.8 million.

Guidance

The company revised 2019 revenue outlook, which is now estimated to range between $334 and $337 million (down from the previously guided range of $337-$343 million).

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -94.64% due to these changes.

VGM Scores

Currently, Luminex has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Luminex has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.



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