Varian Medical Systems Earnings: Margins Rise with Revenues, Net Income Rises

S&P 500 (NYSE:SPY) component Varian Medical Systems Inc. (NYSE:VAR) reported its results for the third quarter. Varian Medical Systems manufactures, designs, services and sells equipment and software products for treating cancer with radiotherapy, stereotactic radiosurgery and brachytherapy.

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Varian Medical Systems Inc. Earnings Cheat Sheet

Results: Net income for Varian Medical Systems Inc. rose to $108.8 million (96 cents per share) vs. $98.6 million (83 cents per share) in the same quarter a year earlier. This marks a rise of 10.3% from the year-earlier quarter.

Revenue: Rose 8.6% to $705.3 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Varian Medical Systems Inc. beat the mean analyst estimate of 93 cents per share. Analysts were expecting revenue of $711.7 million.

Quoting Management: “All of our major businesses contributed to solid growth in earnings and revenues,” said Tim Guertin, president and CEO of Varian Medical Systems. “Gross margins for the company improved with increases in our X-Ray Products and Oncology businesses. We continued to operate in a challenging global environment with big swings in European currency exchange rates. Net orders were even for the total company compared with the year-ago quarter and up slightly on a constant currency basis.”

Key Stats:

Revenue has increased for four quarters in a row. Revenue increased 11.1% to $720.3 million in the second quarter. The figure rose 7.8% in the first quarter from the year earlier and climbed 10.3% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after meeting expectations in the second quarter with net income of 96 cents per share.

Margins increased in the second quarter after dropping the quarter before. Gross margins grew to 43.6%, up 0.5 percentage point from the year-earlier quarter. In the first quarter, the figure rose 3.4 percentage points to 41.2% from the year earlier quarter.

Net income has increased 3.9% year-over-year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed 15.3% from the year-earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is $1.12 per share, down from $1.18 ninety days ago. For the fiscal year, the average estimate has moved down from $3.95 a share to $3.79 over the last ninety days.

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

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