Watson Pharmaceuticals Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Watson Pharmaceuticals, Inc. (NYSE:WPI) will unveil its latest earnings on Thursday, November 1, 2012. Watson Pharmaceuticals develops, manufactures, markets, sells and distributes pharmaceutical products.

Watson Pharmaceuticals, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of $1.29 per share, a rise of 18.3% 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 $1.34. Between one and three months ago, the average estimate moved down. It also has dropped from $1.30 during the last month. For the year, analysts are projecting profit of $5.84 per share, a rise of 22.4% from last year.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 4 cents, reporting net income of $1.42 per share against a mean estimate of profit of $1.38 per share.

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A Look Back: In the second quarter, the company swung to a loss of $62.2 million (49 cents a share) from a profit of $52.7 million (42 cents) a year earlier, but beat analyst expectations. Revenue rose 25.3% to $1.36 billion from $1.08 billion.

Wall St. Revenue Expectations: Analysts predict a rise of 17.6% in revenue from the year-earlier quarter to $1.27 billion.

Stock Price Performance: Between August 2, 2012 and October 26, 2012, the stock price rose $8.28 (10.6%), from $78.36 to $86.64. It saw one of its worst periods between February 16, 2012 and February 27, 2012 when shares fell for seven straight days, dropping 3.9% (-$2.37) over that span.

Key Stats:

With double-digit revenue growth the past four quarters, this earnings release is a chance to keep that positive trend going. The company has averaged year-over-year revenue growth of 46% over the last four quarters.

Analyst Ratings: With 15 analysts rating the stock a buy, none rating it a sell and six rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.52 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.

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

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