Forest Labs Earnings: Fifth Straight Quarter of Expanding Margins, but Net Income Declines

S&P 500 (NYSE:SPY) component Forest Laboratories Inc. (NYSE:FRX) posted a decrease in profit as revenue declined. Forest Laboratories and its subsidiaries develop, manufacture and sell prescription drug products.

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Forest Laboratories Earnings Cheat Sheet for the Second Quarter

Results: Net income for Forest Laboratories Inc. fell to $20.8 million (8 cents per share) vs. $249.8 million (91 cents per share) a year earlier. This is a decline of 91.7% from the year-earlier quarter.

Revenue: Fell 34.7% to $760.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Forest Laboratories Inc. reported adjusted net income of 15 cents per share. By that measure, the company beat the mean estimate of 7 cents per share. It fell short of the average revenue estimate of $808.3 million.

Key Stats:

Last quarter marked the fifth consecutive quarter of increasing gross margins, as the company’s gross margin expanded three percentage points from the year-earlier quarter to 80.3%. In this period, margins have grown an average of 1.1 percentage points per quarter on a year-over-year basis.

Revenue has been on the decline for three quarters in a row. In the first quarter, revenue declined 28.7% to $817.6 million while the figure fell 7.2% in the fourth quarter of the last fiscal year from the year earlier.

The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 21 cents versus a mean estimate of net income of 25 cents per share.

Looking Forward: Over the past ninety days, the average estimate for the third quarter has fallen from 17 cents per share to 13 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. For the fiscal year, the average estimate has moved down from 96 cents a share to 73 cents over the last sixty days.

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

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