Varian Medical Systems First Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Varian Medical Systems (NYSE:VAR) will unveil its latest earnings on Wednesday, January 23, 2013. Varian Medical Systems manufactures, designs, services and sells equipment and software products for treating cancer with radiotherapy, stereotactic radiosurgery and brachytherapy.

Varian Medical Systems Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 86 cents per share, a rise of 8.9% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 88 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 86 cents during the last month. Analysts are projecting profit to rise by 9% compared to last year’s $4.12.

Past Earnings Performance: The company is looking to top estimates for the third straight quarter. Last quarter, it reported net income of $1.08 per share against a mean estimate of profit of $1.03, and the quarter before, the company exceeded forecasts by 3 cents with net income of 96 cents versus a mean estimate of profit of 93 cents.

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Stock Price Performance: Between October 19, 2012 and January 16, 2013, the stock price rose $15.72 (26.9%), from $58.42 to $74.14. The stock price saw one of its best stretches over the last year between March 6, 2012 and March 15, 2012, when shares rose for eight straight days, increasing 9.8% (+$6.32) over that span. It saw one of its worst periods between March 15, 2012 and March 23, 2012 when shares fell for seven straight days, dropping 2.6% (-$1.83) over that span.

A Look Back: In the fourth quarter of the last fiscal year, profit rose 19.3% to $120.2 million ($1.07 a share) from $100.8 million (87 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 5.2% to $756.2 million from $718.9 million.

Wall St. Revenue Expectations: Analysts predict a rise of 8.1% in revenue from the year-earlier quarter to $676.1 million.

Key Stats:

After experiencing income increases the last three quarters, the company is hoping to keep the good news coming with this earnings announcement. Net income rose 4.6% in the second quarter of the last fiscal year and 10.3% in the third quarter of the last fiscal year before increasing again in the fourth quarter of the last fiscal year.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 7.8% in the first quarter of the last fiscal year, 11.1% in the second quarter of the last fiscal year and 8.6% in the third quarter of the last fiscal year before increasing again in the fourth quarter of the last fiscal year of the last fiscal year.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.76 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.78 in the third quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 9.4% to $1.24 billion while assets rose 7.6% to $2.17 billion.

Analyst Ratings: There are eight out of 11 analysts surveyed (72.7%) rating Varian Medical Systems a buy.

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