St. Jude Medical Earnings Cheat Sheet: Margins Keep Shrinking as Net Income Drops

S&P 500 (NYSE:SPY) component St. Jude Medical, Inc. (NYSE:STJ) reported its results for the second quarter. St. Jude Medical Inc. develops, manufactures and distributes cardiovascular medical devices.

Don’t Miss: Wall St. Cheat Sheet’s newest Feature Trades of the Month!

St. Jude Medical Earnings Cheat Sheet for the Second Quarter

Results: Net income for the medical appliances and equipment company fell to $240.9 million (72 cents per share) vs. $254 million (77 cents per share) a year earlier. This is a decline of 5.2% from the year earlier quarter.

Revenue: Rose 10.2% to $1.45 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: STJ reported adjusted net income of 85 cents per share. By that measure, the company beat the mean estimate of 84 cents per share. Analysts were expecting revenue of $1.45 billion.

Quoting Management: Commenting on the second quarter and the Company’s growth program, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, “St. Jude Medical delivered record sales during the second quarter. We are making good progress implementing our new growth drivers and diversifying our growth portfolio. Although sales in the U.S. were down 2% due primarily to weakness in the U.S. cardiac rhythm management market, international sales increased 23% and now represent the majority of our business.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.2 percentage point to 73.5% from the year earlier quarter. Over that time, margins have contracted on average 0.8 percentage point per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 2 cents in the first quarter, by one cent in the fourth quarter of the last fiscal year, and by 4 cents in the third quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 9% to $1.38 billion in the first quarter. The figure rose 12.2% in the fourth quarter of the last fiscal year from the year earlier and climbed 6.9% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 2.2% from the year earlier quarter.

Competitors to Watch: Medtronic, Inc. (NYSE:MDT), Boston Scientific Corp. (NYSE:BSX), Edwards Lifesciences Corp (NYSE:EW), Hansen Medical, Inc. (NASDAQ:HNSN), Greatbatch Inc. (NYSE:GB), Cardima, Inc. (CADMQ), AtriCure Inc. (NASDAQ:ATRC), Volcano Corporation (NASDAQ:VOLC), C.R. Bard, Inc. (NYSE:BCR), and Stereotaxis, Inc. (NASDAQ:STXS).

Don’t Miss Wall St. Cheat Sheet’s newest Feature Trades of the Month!

(Source: Xignite Financials)

More from The Cheat Sheet