Why Is Phibro (PAHC) Up 13.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Phibro Animal Health (PAHC). Shares have added about 13.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Phibro 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 drivers.
Phibro Q1 Earnings Miss Estimates, Margins Dip
Phibrodelivered adjusted earnings per share of 14 cents in the first quarter of fiscal 2024, down 33.3% from the year-ago quarter’s adjusted figure. The metric also missed the Zacks Consensus Estimate by 33.3%.
Without adjustments, the GAAP loss per share in the fiscal first quarter was 20 cents compared to the earnings per share of 10 cents in the year-ago quarter.
Net Sales
In the quarter under review, net sales totaled $231.3 million, a 0.5% decrease from the year-ago quarter. The figure also missed the Zacks Consensus Estimate by 4.4%.
Segmental Sales Breakup
The company conducts its operations via three segments — Animal Health, Mineral Nutrition and Performance Products.
In the first quarter of fiscal 2024, Animal Health’s net sales increased 3.6% to $160.5 million. Our model’s projected revenues were $164.3 million.
Within the segment, net sales of medicated feed additives (MFAs) and others reflected 1% year-over-year growth. The uptick was driven by increased sales of the company’s processing aids used in the ethanol fermentation industry.
Within Animal Health, nutritional specialty product sales rose 3%, with increased volumes in poultry customers, primarily domestic. Also, net vaccine sales showed a year-over-year rise of 14% due to poultry product introductions in Latin America and growth in the U.S. swine sector, partially offset by the timing of deliveries in other international regions.
Net sales in the Mineral Nutrition segment fell 6% year over year due to declines in average selling prices and reduced volumes due to reduced demand. Per our model, revenues from this segment were expected to be $57.7 million in the fiscal first quarter.
Net sales in the Performance Products segment fell 17.8% to $14.8 million as a result of the lower demand for the ingredients used in personal care products. Our model projected the segment to report $18.5 million in revenues.
Margins
Phibro’s fiscal first-quarter gross profit fell 1.3% year over year to $67.7 million. The gross margin contracted 24 basis points (bps) to 29.3% on a 0.2% rise in the cost of goods sold to $163.6 million.
SG&A expenses in the reported quarter were $68.5 million, up 24.6% from the year-ago quarter’s levels. The operating profit fell a staggering 106% year over year to $0.8 million, while the operating margin contracted 620 bps to 0.3% in the quarter under review.
Financial Update
The company exited the fiscal 2024 first quarter with cash and short-term investments of $91.2 million compared with $81.3 million at the end of the fourth quarter of fiscal 2023. Cumulative net cash provided by operating activities at the end of the first quarter was $16.2 million compared with net cash outflow of $10.7 million in the prior year’s comparable period.
Guidance
Phibro provided updated guidance for fiscal 2024.
The company expects net sales between $980 million to $1.02 billion (earlier $1 billion-$1.05 billion). The Zacks Consensus Estimate for the metric is pegged at $1.02 billion.
Adjusted earnings per share is expected in the range of $1.04-$1.16 (previously $1.12-$1.27). The Zacks Consensus Estimate is pegged at $1.18.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -8.52% due to these changes.
VGM Scores
At this time, Phibro has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 Phibro has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Phibro is part of the Zacks Medical - Products industry. Over the past month, Bio-Rad Laboratories (BIO), a stock from the same industry, has gained 1.1%. The company reported its results for the quarter ended September 2023 more than a month ago.
Bio-Rad reported revenues of $632.12 million in the last reported quarter, representing a year-over-year change of -7.2%. EPS of $2.33 for the same period compares with $2.60 a year ago.
Bio-Rad is expected to post earnings of $2.93 per share for the current quarter, representing a year-over-year change of -11.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -11.6%.
Bio-Rad has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
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