Covidien First Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Covidien (NYSE:COV) will unveil its latest earnings tomorrow, Friday, January 25, 2013. 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.

Covidien Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of $1.06 per share, a decline of 6.2% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from $1.08. Between one and three months ago, the average estimate moved down. It has been unchanged at $1.06 during the last month.

Past Earnings Performance: Last quarter, the company beat estimates by 2 cents, coming in at profit of $1.02 a share versus the estimate of net income of $1 a share. It marked the fourth straight quarter of beating estimates.

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Wall St. Revenue Expectations: Analysts are projecting a rise of 3.4% in revenue from the year-earlier quarter to $3 billion.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.15 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 2.41 in the third quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 12.2% to $2.91 billion while assets rose 0.2% to $6.27 billion.

A Look Back: In the fourth quarter of the last fiscal year, profit rose 2.2% to $461 million (95 cents a share) from $451 million (92 cents a share) the year earlier, exceeding analyst expectations. Revenue fell 2.5% to $3 billion from $3.08 billion.

Here’s how Covidien traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

cov

Key Stats:

On the top line, the company is looking to get back on the right track after last quarter’s drop snapped a string of revenue increases. Revenue rose 4.7% in the first quarter of the last fiscal year, 5.2% in the second quarter of the last fiscal year and 2.8%in the third quarter of the last fiscal year before dropping in the fourth quarter of the last fiscal year.

The company enters this earnings announcement with steady profits recently. Net income has risen year-over-year average of 3% for the last four quarters.

Analyst Ratings: With 15 analysts rating the stock a buy, one rating it a sell and two rating the stock a hold, there are indications of a bullish stance by analysts.

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