Stryker Corp. Earnings Cheat Sheet: Margins Shrink as Net Income Drops

Rising costs hurt S&P 500 (NYSE:SPY) component Stryker Corporation (NYSE:SYK) in the third quarter as profit dropped from a year earlier. Stryker is a medical technology firm that produces a range of products in medical implants, surgical technologies and emergency medical equipment.

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Stryker Earnings Cheat Sheet for the Third Quarter

Results: Net income for the medical instruments and supplies company fell to $327 million (84 cents per share) vs. $337.7 million (85 cents per share) a year earlier. This is a decline of 3.2% from the year earlier quarter.

Revenue: Rose 14.9% to $2.03 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SYK reported adjusted net income of 91 cents per share. By that measure, the company beat the mean estimate of 89 cents per share. Analysts were expecting revenue of $2.04 billion.

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the second quarter, net income fell 3.1% while the figure fell 4.4% in the first quarter and 3.6% in the fourth quarter of the last fiscal year.

Gross margin shrank 2.3 percentage points to 67.1%. The contraction appeared to be driven by increased costs, which rose 23.7% from the year earlier quarter while revenue rose 14.9%.

Revenue has risen the past four quarters. Revenue increased 16.3% to $2.05 billion in the second quarter. The figure rose 12% in the first quarter from the year earlier and climbed 8.8% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the second quarter with net income of 90 cents per share.

Looking Forward: The average estimate for the fourth quarter is steady at $1.03 a share. The average estimate hasn’t changed from $3.71 per share for the fiscal year.

Competitors to Watch: Zimmer Holdings, Inc. (NYSE:ZMH), Exactech, Inc. (NASDAQ:EXAC), Smith & Nephew plc (NYSE:SNN), Wright Medical Group, Inc. (NASDAQ:WMGI), Tornier N.V. (TRNX), CONMED Corporation (NASDAQ:CNMD), ArthroCare Corporation (NASDAQ:ARTC), Medtronic, Inc. (NYSE:MDT), NuVasive, Inc. (NASDAQ:NUVA), and Alphatec Holdings, Inc. (NASDAQ:ATEC).

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(Source: Xignite Financials)