Varian Medical Systems Fourth Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Varian Medical Systems (NYSE:VAR) will unveil its latest earnings on Thursday, October 25, 2012. 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 analyst estimate is for profit of $1.03 per share, a rise of 8.4% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $1.12. Between one and three months ago, the average estimate moved down. It has been unchanged at $1.03 during the last month. Analysts are projecting profit to rise by 8.4% compared to last year’s $3.73.

Past Earnings Performance: Last quarter, the company topped estimates by 0 cents, coming in at net income of 96 cents per share against a mean estimate of profit of 93 cents. The company fell in line with estimates in the second quarter.

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A Look Back: In the third quarter, profit rose 10.3% to $108.8 million (96 cents a share) from $98.6 million (83 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 8.6% to $705.3 million from $649.4 million.

Stock Price Performance: Between July 26, 2012 and October 19, 2012, the stock price rose $4.69 (8.7%), from $53.73 to $58.42. 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.

Wall St. Revenue Expectations: Analysts predict a rise of 4% in revenue from the year-earlier quarter to $747.4 million.

Key Stats:

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 10.3% in the fourth quarter of the last fiscal year, 7.8% in the first quarter and 11.1% in the second quarter before increasing again in the third quarter.

There has enjoyed solid performance recently heading into this earnings announcement with profit rising by a year-over-year average of 1.1% for the last four quarters.

Analyst Ratings: There are seven out of 10 analysts surveyed (70%) rating Varian Medical Systems a buy.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.78 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 1.8 in the second quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 2.6% to $1.13 billion while assets rose 1.9% to $2.02 billion.

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

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