Watson Pharmaceuticals Inc. Earnings: Revenue and Profit Climb
S&P 500 (NYSE:SPY) component Watson Pharmaceuticals Inc. (NYSE:WPI) reported higher profit for the fourth quarter as revenue showed growth. Watson Pharmaceuticals develops, manufactures, markets, sells and distributes pharmaceutical products.
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Watson Pharmaceuticals Earnings Cheat Sheet for the Fourth Quarter
Results: Net income for the pharmaceutical company rose to $94.8 million (75 cents per share) vs. $18.3 million (15 cents per share) in the same quarter a year earlier. This marks a substantial increase from the year earlier quarter.
Revenue: Rose 62.1% to $1.54 billion from the year earlier quarter.
Actual vs. Wall St. Expectations: Watson Pharmaceuticals Inc. reported adjusted net income of $1.77 per share. By that measure, the company beat the mean estimate of $1.75 per share. Analysts were expecting revenue of $1.54 billion.
Quoting Management: “2011 continued a track record of success and growth for Watson. Revenues for the fourth quarter grew by 62 percent and non-GAAP earnings per share increased by 90 percent versus 2010. Additionally, strong cash flow from operations for the year of more than $630 million enabled us to reduce our debt to adjusted EBITDA ratio to below 1.0x at year end, putting us in a strong position to continue to execute on our strategies including investments in acquisitions that provide long-term growth for the Company and its shareholders,” said Paul Bisaro, President and CEO.
The company has now topped analyst estimates for the last four quarters. It beat the mark by 4 cents in the third quarter, by one cent in the second quarter, and by 3 cents in the first quarter.
Gross margin shrank 4.1 percentage points to 42.2%. The contraction appeared to be driven by increased costs, which rose 74.6% from the year earlier quarter while revenue rose 62.1%.
Revenue has risen the past four quarters. Revenue increased 22.6% to $1.08 billion in the third quarter. The figure rose 23.6% in the second quarter from the year earlier and climbed 2.3% in the first quarter from the year-ago quarter.
Watson Pharmaceuticals has now seen net income rise in two straight quarters. In the third quarter, net income rose more than twofold from the year earlier.
Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved up from $1.53 a share to $1.56 over the last thirty days. At $4.76 per share, the average estimate for the fiscal year has risen from $4.60 sixty days ago.
(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)
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