CVS Caremark Earnings: Fifth Straight Quarter of Shrinking Margins, but Profit Rises

S&P 500 (NYSE:SPY) component CVS Caremark Corporation (NYSE:CVS) reported its results for the second quarter. CVS Caremark provides prescriptions and related health care services and products.

Investing Insights: Is TV the Next Bullish Catalyst for Apple’s Stock?

CVS Caremark Corporation Earnings Cheat Sheet

Results: Net income for CVS Caremark Corporation rose to $966 million (75 cents per share) vs. $816 million (60 cents per share) in the same quarter a year earlier. This marks a rise of 18.4% from the year-earlier quarter.

Revenue: Rose 15.3% to $30.7 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: CVS Caremark Corporation reported adjusted net income of 81 cents per share. By that measure, the company beat the mean estimate of 79 cents per share. Analysts were expecting revenue of $30.31 billion.

Key Stats:

For the past five quarters, the company has seen double-digit year-over-year percentage revenue growth. Over that span, the company has averaged growth of 14.2%, with the biggest boost coming in the first quarter when revenue rose 19% from the year earlier quarter.

The comapny has now seen its net income increase for four quarters in a row. In the first quarter, net income rose 8.8% while the figure climbed 3.7% in the fourth quarter of the last fiscal year and 7.3% in the third quarter of the last fiscal year from the year earlier.

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 1.4 percentage points from the year-earlier quarter to 17.7%. Over that time, margins have contracted on average 1.8 percentage points per quarter on a year-over-year basis.

The company has now beaten estimates the last two quarters. In the first quarter, it topped expectations with net income of 65 cents versus a mean estimate of net income of 63 cents per share.

Looking Forward: For the next quarter, analysts are growing pessimistic about the company’s expected results. The average estimate for the third quarter is 83 cents per share, dropping from 84 cents a month ago. Over the past three months, the average estimate for the fiscal year has climbed from $3.27 per to share to $3.29.

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:

The Mining Industry Welcomes Central Bank QE

Is Chevron’s Stock a Buy Now?

Facebook: Fake Out?