Covidien Earnings Cheat Sheet: Margins Expand Again, Profit Rises

Covidien plc (NYSE:COV) reported its results for the fourth quarter. Covidien is engaged in the development, manufacture, and sale of healthcare products for use in clinical and home settings. It operates its businesses through three segments: medical devices, pharmaceuticals, and medical supplies.

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Covidien plc Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Covidien plc rose to $451 million (93 cents per share) vs. $443 million (77 cents per share) in the same quarter a year earlier. This marks a rise of 1.8% from the year earlier quarter.
Revenue: Rose 15.4% to $3.08 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: COV reported adjusted net income of $1.08 per share. By that measure, the company beat the mean estimate of $1.05 per share. Analysts were expecting revenue of $3.03 billion.

Quoting Management: “We delivered strong fourth-quarter and fiscal 2011 results,” said Jos E. Almeida, President and CEO. “This performance was aided by successful new product launches, market share gains in several key categories and exceptional commercial execution. We significantly increased R&D spending, made other important growth-driving investments and again generated strong cash flow. Looking to 2012, we remain comfortable with the sales and operating margin guidance we issued in September. Although the market environment continues to be challenging, our expectations for the operational growth of our business have not changed. We are confident that our robust new products pipeline, skilled workforce and strategic investments in emerging markets will drive positive operational results in 2012 and beyond.”

Key Stats:
Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 1.6 percentage points to 56.6% from the year earlier quarter. Over that span, margins have grown on average 2.3 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the third quarter, net income rose 47% and in the second quarter, the figure rose 10.2%.

The company has now topped analyst estimates for the last four quarters.  It beat the mark by 6 cents in the third quarter, by 4 cents in the second quarter, and by 14 cents in the first quarter.

Revenue has risen the past four quarters. Revenue increased 14.1% to $2.93 billion in the third quarter. The figure rose 5.2% in the second quarter from the year earlier and climbed 0.7% in the first quarter from the year-ago quarter.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the first quarter of the next fiscal year is $1.04 per share, up from $1.03 ninety days ago. For the fiscal year, the average estimate has moved up from $3.93 a share to $3.94 over the last thirty days.

Competitors to Watch: C.R. Bard, Inc. (NYSE:BCR), Teleflex Incorporated (NYSE:TFX), Becton, Dickinson and Co. (NYSE:BDX), Baxter International Inc. (NYSE:BAX), Angiotech Pharmaceuticals, Inc. (NASDAQ:ANPI), CareFusion Corporation (NYSE:CFN), CONMED Corporation (NASDAQ:CNMD), AngioDynamics, Inc. (NASDAQ:ANGO), and Masimo Corporation (NASDAQ:MASI).

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

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