Forest Labs Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Forest Labs (NYSE:FRX) will unveil its latest earnings tomorrow, Tuesday, January 15, 2013

Forest Labs Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net loss of 13 cents per share, a swing from profit of $1.04 in the year-earlier quarter. During the past three months, the average estimate has moved down from 14 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at a loss of 13 cents during the last month. Analysts are projecting profit to rise by 93.3% versus last year to 26 cents.

Last quarter, the company came in at net income of 15 cents per share against a mean estimate of 0 cents per share, beating estimates after missing them in the previous quarter. In the first quarter, it missed forecasts by 4 cents.

Earnings season is back and more important than ever. Get our newest CHEAT SHEET stock picks now

A Look Back: In the second quarter, profit fell 91.7% to $20.8 million (8 cents a share) from $249.8 million (91 cents a share) the year earlier, but exceeded analyst expectations. Revenue fell 34.7% to $760.6 million from $1.16 billion.

Wall St. Revenue Expectations: Analysts predict a decline of 36.8% in revenue from the year-earlier quarter to $765.3 million.

Analyst Ratings: There are mostly holds on the stock with 10 of 18 analysts surveyed giving that rating.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of three-straight quarters of revenue declines. Revenue fell 6.7% in the fourth quarter of the last fiscal year and 28.4% in first quarter before falling again in the second quarter.

The company is trying to stem some negative momentum heading into this earnings announcement. Profit has dropped by a year-over-year average of 55.9% over the past four quarters.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 3.8 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.

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.

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

FRX

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

Don’t Miss These Additional Hot Stories:

Can Google Beat the Bears and Outperform in 2013?

Cheat Sheet: Gundlach’s Year of the Snake 2013 Outlook

Is Alcoa’s Stock a Buy Now?