Waters Corp Earnings Cheat Sheet: Rising Revenue Helps Margins Expand, Profit Rises

S&P 500 (NYSE:SPY) component Waters Corporation (NYSE:WAT) reported its results for the third quarter. Waters is an analytical instrument manufacturer that designs, manufactures, sells and services liquid chromatography, ultra performance liquid chromatography, mass spectrometry instrument systems, and support products.

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Waters Earnings Cheat Sheet for the Third Quarter

Results: Net income for the scientific and technical instruments company rose to $101.3 million ($1.10 per share) vs. $94.7 million ($1.02 per share) in the same quarter a year earlier. This marks a rise of 6.9% from the year earlier quarter.

Revenue: Rose 13.3% to $454.5 million from the year earlier quarter.

Actual vs. Wall St. Expectations: WAT reported adjusted net income of $1.14 per share. By that measure, the company was about in line with expectations as the mean analyst estimate was $1.13 per share. Analysts were expecting revenue of $451.6 million.

Quoting Management: Douglas Berthiaume, Chairman, President and Chief Executive Officer said, “Our sales growth in the third quarter was driven by new instrument systems including ACQUITY H-Class UPLC, UPLC-MS solutions and strong TA Instruments product shipments. In addition, our growth was balanced geographically and across our key customer groupings.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 17.8% and in the first quarter, the figure rose 25.1%.

Revenue has risen the past four quarters. Revenue increased 14.5% to $447.6 million in the second quarter. The figure rose 16.3% in the first quarter from the year earlier and climbed 12.8% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company topped expectations last quarter after falling short of forecasts in the second quarter with net income of $1.08 versus a mean estimate of net income of $1.14 per share.

Gross margins grew one percentage point to 60.3%. The growth seemed to be driven by increased revenue, as the figure rose 13.3% from the year earlier quarter while costs rose 10.6%.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from $1.57 a share to $1.55 over the last seven days. For the fiscal year, the average estimate has moved down from $4.87 a share to $4.80 over the last ninety days.

Competitors to Watch: Bruker Corporation (NASDAQ:BRKR), Dionex Corporation (NASDAQ:DNEX), Transgenomic, Inc. (TBIO), Beckman Coulter, Inc. (NYSE:BEC), PerkinElmer, Inc. (NYSE:PKI), Thermo Fisher Scientific Inc. (NYSE:TMO), Bio-Rad Laboratories, Inc. (NYSE:BIO), Harvard Bioscience, Inc. (NASDAQ:HBIO), Cepheid (NASDAQ:CPHD), and Mettler-Toledo Intl. Inc. (NYSE:MTD).

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(Source: Xignite Financials)