Stryker Corp's Profit Skyrockets

GuruFocus.com
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- By Alberto Abaterusso

These health care large caps released earnings on Tuesday.

Shares of HCA Healthcare Inc. (HCA) jumped 4.78% to $138.03 on Tuesday after the Nashville, Tennessee-based medical care company beat analysts on both non-GAAP earnings per share by 44 cents and GAAP earnings per share by 41 cents for the last quarter of 2018. HCA Healthcare closed the trimester posting non-GAAP earnings per share of $2.99, representing a 131.5% increase from the prior-year quarter and GAAP earnings per share of $3.01, reflecting 130% growth year-over-year.


The company also beat consensus on revenue for the last trimester of 2018. In fact, HCA Healthcare posted revenue of $12.2 billion, which was a 6.1% increase year-over-year, versus a consensus of $12.04 billion.

In 2018 the company produced cash flow from operations of $6.761 billion, which was a 24.6% increase from 2017.

Further, the board of directors of HCA Healthcare has decided to implement another $2 billion buyback program and to hike the quarterly dividend by 14.3% to 40 cents per ordinary share from the previous distribution. On March 29, HCA Healthcare will pay the next cash quarterly dividend to its shareholders of record March 1. The ex-dividend date is scheduled for Feb. 28. Following the increase, the forward dividend yield is 1.06% versus an industry median of 1.99% as of Jan. 29.

In addition, the company has guided for revenues between $50.5 billion and $51.5 billion, earnings per share between $9.60 and $10.20, non-GAAP Ebitda of $9.35 billion to $9.75 billion and capital expenditures of about $3.7 billion for full-year 2019.

The share price has climbed 36% for the 52 weeks through Jan. 29 and is now trading above the 200-, 100- and 50-day simple moving average lines. The share price at close Tuesday was 48.4% below the 52-week low of $93.03 and 6.8% off the 52-week high of $147.42. The market capitalization of the stock is approximately $47.5 billion.

The stock has a price-earnings ratio of 15.42 versus an industry median of 27.31 and a price-sales ratio of 1.08 versus an industry median of 1.7.

GuruFocus has assigned to HCA Healthcare a financial strength rating of 4 out of 10 and a profitability and growth rating of 8 out of 10.

The recommendation rating is 2 out of 5, and the average target price is $149.17 per share.

Allergan Plc (AGN) tumbled 8.55% to $145.12 per share on Tuesday after the Dublin, Ireland-based drug producer missed consensus on fourth-quarter GAAP earnings per share by $12.39, having posted a loss of $12.83. Instead, the non-GAAP earnings per share were $4.29 versus a consensus for $4.15. Compared to the same trimester of 2017, the non-GAAP earnings per share declined nearly 12%.

Allergan produced these earnings results on revenue of $4.08 billion, which was nearly 6% lower than the prior-year quarter. The company beat consensus on revenues by $70 million. The top line was shared between the following segments.

Sales from the U.S. Specialized Therapeutics segment were $1.81 billion for a 3.9% downside from 2017, sales from the U.S. General Medicine segment went down 8.4% year-over-year to about $1.4 billion and sales from the International segment were $870.2 million, for a 5% downside from 2017.

Allergan generated a cash flow of $5.64 billion from full year 2018 operations which, compared to the entire year of 2017, represented a 7.2% decline.

For full-year 2019, the health care company has guided for revenue of $15 billion to $15.3 billion, non-GAAP earnings per share of $16.36 or more, GAAP earnings per share of $1.14 or more and operating cash flow of $5 billion to $5.5 billion.

The share price declined 19% for the 52 weeks through Jan. 29 and is now trading below the 200-, 100- and 50-day SMA lines. The share price at close Tuesday falls in a 52-week range of $125.84 to $197. The market capitalization is $48.95 billion.

The price-book ratio is 0.69 versus an industry median of 2.64, the price-sales ratio is 3.04 versus an industry median of 3.1 and the price-earnings ratio is 21.99 versus an industry median of 23.77.

Allergan is a dividend payer. The company will pay a 74-cent cash quarterly dividend per ordinary share, which represents a 2.8% increase from the previous quarter, on March 15 to its shareholders of record Feb. 15. The ex-dividend date is scheduled for Feb. 14. The forward dividend yield is 1.87% versus an industry median of 1.66 as of Jan. 29.

GuruFocus has assigned to Allergan a financial strength rating of 5 out of 10 and a profitability and growth rating of 5 out of 10.

The recommendation rating is 2 out of 5, and the average target price is $202.71 per share.

Biogen Inc. (BIIB) increased 1.35% to $334.48 per share following the earnings announcement for the last trimester of 2018. The Cambridge, Massachusetts-based biotechnology company has beaten non-GAAP earnings per share by 26 cents with $6.99 and missed GAAP earnings per share by $1.44 with $4.73. The bottom line significantly improved from 2017.

Biogen posted a 6.6% increase in revenue to $3.53 billion and beat consensus by $140 million. Product sales increased 4.2% to almost $2.83 billion, Anti-CD20 therapeutic programs revenues soared nearly 29% to almost $535 million and other revenues decreased 7.7% to $165.7 million. Biogen also reported cash flow generation of $6.2 billion.

For full-year 2019, Biogen has guided that revenues will range between $13.6 billion and $13.8 billion, GAAP earnings per share will range between $26.65 and $27.65 and non-GAAP earnings per share will range between $28 and $29.

The stock's price lost 4% over the past year through Tuesday. The share price is trading above the 200-, 100- and 50-day SMA lines, 34.2% off the 52-week low of $249.17 and 16.2% below the 52-week high of $388.67. The stock has a market capitalization of approximately $67.39 billion.

The price-book ratio is 4.9 versus an industry median of 4.1, the price-sales ratio is 5.26 versus an industry median of 4.12 and the price-earnings ratio is 21.59 versus an industry median of 28.79.

Biogen is not paying a dividend.

GuruFocus has assigned to Allergan a financial strength rating of 7 out of 10 and a profitability and growth rating of 10 out of 10.

The recommendation rating is 2 out of 5, and the average target price is $385.96 per share.

Stryker Corp. (SYK) issued fourth-quarter results on Tuesday after the closing bell. The Kalamazoo, Michigan-based medical devices producer issued non-GAAP earnings per share of $2.18 versus consensus of $2.15, GAAP earnings per share of $5.44 versus consensus of $1.8 and revenue of $3.8 billion compared to consensus for $3.74 billion.

GAAP earnings per share increased 924.2% , non-GAAP earnings per share rose 11.2% and revenue went up 9.5% year-over-year.

Stryker Corp. generated $2.61 billion cash flow from its full-year 2018 operations, a 67.4% advance from 2017.

The company has also produced non-GAAP earnings per share of $1.8 to $1.85 for the first trimester and of $8 to $8.2 for full-year 2019. Regarding the top line of the income statement for full fiscal 2019, Stryker Corp. forecasts that total revenues will grow at a 6.5-7.5% rate from 2018.

The share price has decreased 2% to $161.1 for the 52 weeks through Jan. 29 and is now trading below the 200-, 100- and 50-day simple moving average lines. The 52-week range is $144.75 to $179.84. The market capitalization of the stock is approximately $60.27 billion.

The stock has a price-book ratio of 6.11 versus an industry median of 3.06, a price-earnings ratio of 49.71 versus an industry median of 30.17 and a price-sales ratio of 4.62 versus an industry median of 3.15.

The stock has a forward dividend yield of 1.29% compared to an industry median of 1.48%.

GuruFocus has assigned to Stryker Corp. a financial strength rating of 6 out of 10 and a profitability and growth rating of 8 out of 10.

The recommendation rating is 2 out of 5, and the average target price is $186.18 per share.

Disclosure: I have no positions in any securities mentioned.

This article first appeared on GuruFocus.


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