Covidien Fourth Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Covidien (NYSE:COV) will unveil its latest earnings on Friday, November 9, 2012. 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 analyst estimate is for profit of $1 per share, a decline of 7.4% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $1.02. Between one and three months ago, the average estimate moved down. It has been unchanged at $1 during the last month. For the year, analysts are projecting net income of $4.24 per share, a rise of 6.8% from last year.

Past Earnings Performance: Last quarter, the company beat estimates by one cent, coming in at profit of $1.07 a share versus the estimate of net income of $1.06 a share. It marked the fourth straight quarter of beating estimates.

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A Look Back: In the third quarter, profit fell 15.3% to $453 million (93 cents a share) from $535 million ($1.07 a share) the year earlier, but exceeded analyst expectations. Revenue rose 2.8% to $3.01 billion from $2.93 billion.

Stock Price Performance: Between October 8, 2012 and November 5, 2012, the stock price dropped $4.14 (-6.9%), from $59.79 to $55.65. The stock price saw one of its best stretches over the last year between September 12, 2012 and September 24, 2012, when shares rose for nine straight days, increasing 6.1% (+$3.48) over that span. It saw one of its worst periods between October 16, 2012 and October 26, 2012 when shares fell for nine straight days, dropping 6.4% (-$3.75) over that span.

Wall St. Revenue Expectations: Analysts predict a decline of 3.2% in revenue from the year-earlier quarter to $2.98 billion.

Key Stats:

The company is looking to get back on track with this earnings announcement after a profit drop last quarter snapped a positive string of results. Net income rose 1.8% in the fourth quarter of the last fiscal year, 15.7% in the first quarter and 9.2% in the second quarter before declining in the third quarter.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 15.3% in the fourth quarter of the last fiscal year, 4.7% in the first quarter and 5.2% in the second quarter before increasing again in the third quarter.

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

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.41 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.

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

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