Arena Pharma Earnings: Streak of Two Straight Quarters of Expanding Margins Snapped

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) got closer to even, narrowing its loss while beating Wall Street’s expectations.

Earnings season is back and more important than ever. Get our newest CHEAT SHEET stock picks now

Arena Pharmaceuticals Earnings Cheat Sheet for the Third Quarter

Results: Loss narrowed to $15.5 million (loss of 7 cents per diluted share) from $22.7 million (loss of 16 cents per share) in the same quarter a year earlier.

Revenue: Fell 57.1% to $1.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Arena Pharmaceuticals, Inc. beat the mean analyst estimate of a loss of 8 cents per share.

Quoting Management: “We are well positioned to deliver significant value to our stockholders by executing on the potential of BELVIQ and strategically advancing our pipeline of internally discovered drug candidates,” said Jack Lief, Arena’s President and Chief Executive Officer. “We look forward to providing a novel treatment option to patients who need help with chronic weight management. As we prepare for the US launch of BELVIQ, we continue to pursue additional regulatory approvals and collaborations in strategic markets worldwide.”

Key Stats:

The company beat estimates last quarter after falling short in the previous two quarters. In the second quarter, it missed the mark by 4 cents, and in the first quarter, it came in under estimates by 2 cents.

After expanding the quarter before, margins contracted in the second quarter. Gross margin dropped 49 percentage points from the year-earlier quarter to 6%. In the first quarter, the number rose 66.9 percentage points from a year ago to 97%.

Over the last five quarters, revenue has increased 74% on average year-over-year. The biggest increase came in the second quarter, when revenue rose more than sixfold from the year-earlier quarter.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the fourth quarter is 15 cents per share, up from 4 cents ninety days ago. The average estimate for the fiscal year is now 20 cents per share, a rise from the 31 cents predicted ninety days ago.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

Don’t Miss These Additional Hot Stories:

Is Netflix Losing Its Edge?

Who is Apple Trying to Please With the iPad Mini?

Is the U.K. a Tech Company Tax Haven?