Baxter International Earnings Cheat Sheet: Streak of Two Straight Quarters of Expanding Margins Snapped, but Profit Still Rises

S&P 500 (NYSE:SPY) component Baxter International Inc (NYSE:BAX) reported its results for the third quarter. Baxter International is a company that develops and manufactures healthcare products that save and sustain the lives of people with chronic, acute illnesses.

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Baxter International Inc Earnings Cheat Sheet for the Third Quarter

Results: Net income for the medical instruments and supplies company rose to $576 million ($1.01 per share) vs. $525 million (89 cents per share) in the same quarter a year earlier. This marks a rise of 9.7% from the year earlier quarter.

Revenue: Rose 7.9% to $3.48 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: BAX reported adjusted net income of $1.09 per share. By that measure, the company was about in line with expectations as the mean analyst estimate was $1.08 per share. Analysts were expecting revenue of $3.41 billion.

Quoting Management: “The evolving global macro-environment will exert ongoing pressures on our business, creating challenges that we will manage through disciplined execution of our strategies,” said Robert L. Parkinson, Jr., chairman and chief executive officer. “We continue to benefit from the diversified and medically-necessary nature of our portfolio, broad geographic reach and strong financial position, and remain committed to innovation through clinical differentiation, enhanced operational and cost effectiveness, improved earnings growth, and delivering sustained value for our shareholders.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 5 cents in the second quarter, by 5 cents in the first quarter, and by one cent in the fourth quarter of the last fiscal year.

Gross margin shrank 0.6 percentage point to 50.9%. The contraction appeared to be driven by increased costs, which rose 9.1% from the year earlier quarter while revenue rose 7.9%.

Revenue has risen the past four quarters. Revenue increased 10.7% to $3.54 billion in the second quarter. The figure rose 12.2% in the first quarter from the year earlier and climbed 0.8% in the fourth quarter of the last fiscal year from the year-ago quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is $1.17 per share, down from $1.19 ninety days ago. For the fiscal year, the average estimate has moved up from $4.26 a share to $4.30 over the last ninety days.

Competitors to Watch: Covidien plc (NYSE:COV), C.R. Bard, Inc. (NYSE:BCR), ICU Medical, Incorporated (NASDAQ:ICUI), Teleflex Incorporated (NYSE:TFX), Hospira, Inc. (NYSE:HSP), CryoLife, Inc. (NYSE:CRY), Becton, Dickinson and Co. (NYSE:BDX), CareFusion Corporation (NYSE:CFN), Haemonetics Corporation (NYSE:HAE), and NxStage Medical, Inc. (NASDAQ:NXTM).

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(Source: Xignite Financials)


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