Why Is Teleflex (TFX) Up 9.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Teleflex (TFX). Shares have added about 9.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Teleflex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Teleflex Gains Ground on Growth in All Lines in Q4
Teleflex announced earnings per share (EPS) from continuing operations of $2.77 for the fourth quarter of 2018, up 13.5% year over year. However, the bottom line missed the Zacks Consensus Estimate by a penny.
For the full year, adjusted earnings came in at $9.90 per share, a 17.9% surge on a year-over-year basis.
Net revenues in the fourth quarter rose 7.8% year over year to $641.6 million. Excluding the impact of currency fluctuations, fourth quarter net revenues increased 9.4% year over year.
On a year-over-year basis, the company saw organic constant currency revenue growth of 9.1%. This includes he benefit of NeoTract becoming organic in the fourth quarter combined with strong growth from legacy product families.
The company registered revenues of $2.44 million in 2018, up 14.1% (up 12.95 at constant exchange rate or CER) from the year-ago period.
Revenues in Detail
In the fourth quarter, Teleflex’s Vascular North America segment recognized net revenues of $85.7 million, up 6.3% year over year at CER. The company registered strong growth in PICC (Peripherally Inserted Central Catheters), visual navigation products and EZ-IO.
The Interventional North America business registered net revenues of $69.7 million, a 13.3% rise on a year-over-year basis at CER. This upside was fueled by higher sales of Vascular Solutions products as well as growth in OnControl.
Within Anesthesia North America, net revenues climbed 4.8% at CER to $53.2 million. Growth in sales volumes of existing products and stronger new product sales during the third quarter were partially offset by price declines.
Surgical North America realized net revenues of $50.8 million, a 2.1% rise at CER on increased sales of airway and EZ-IO products.
Meanwhile, EMEA grossed revenue growth of 8.2% at CER to $150.9 million, driven by distributor convergence as well as increased sales of vascular access products.
Asia, OEM and All Other logged net revenues of $79.8 million, $52.7 million and $109.6 million, respectively (corresponding top-line growth of 5.5%, 15.4% and 21.4% each at CER), in the quarter under review.
Margin
Gross margin of 57% during the quarter under discussion was up 144 basis points (bps) year over year on 10.6% improvement in gross profits to $365.8 million. Adjusted operating margin expanded 317 bps to 18.6% on 29.9% rise in operating profit to $119.5 million.
Liquidity Position
The company exited the year 2018 with cash and cash equivalents of $357.2 million compared with $333.6 million at the end of 2017. Full-year, net cash provided by operating activities was $435.1 million compared with $426.3 million in the year-ago period.
Outlook
Teleflex has provided its 2019 guidance. Revenues are expected to increase in the band of 5% to 6% over the year-ago period. This reflects an 1% unfavorable impact of foreign exchange translation.
The company forecasts full-year adjusted earnings per share from continuing operations in the $10.90-$11.10 band, representing an increase of 10.1% to 12.1% over 2018 and reflecting a 2% negative impact from foreign exchange translation.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -11.93% due to these changes.
VGM Scores
Currently, Teleflex has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Teleflex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Teleflex Incorporated (TFX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
