S&P 500 (NYSE:SPY) component Quest Diagnostics Incorporated (NYSE:DGX) reported net income above Wall Street’s expectations for the fourth quarter. Quest Diagnostics provides diagnostic testing, information, and services to patients, physicians, and others.

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Quest Diagnostics Incorporated Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Quest Diagnostics Incorporated rose to $189.5 million ($1.19 per share) vs. $165.8 million (96 cents per share) in the same quarter a year earlier. This marks a rise of 14.3% from the year earlier quarter.

Revenue: Rose 3% to $1.88 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: DGX beat the mean analyst estimate of $1.06 per share. Analysts were expecting revenue of $1.86 billion.

Quoting Management: “During the fourth quarter, revenues grew 3%, adjusted earnings per share increased 19%, and cash flow remained strong,” said Surya N. Mohapatra, Ph.D., Chairman and CEO. “We continued to make progress in executing our growth plan and reducing costs. In 2011, we established a solid foundation of strategic assets and capabilities focused on cancer, cardiovascular disease, infectious disease and neurological disorders. In addition, we commenced a multi-year $500 million cost-reduction initiative and returned $1 billion in cash to our shareholders through a combination of share repurchases and dividends. Beginning in 2012, we are increasing our quarterly cash dividend by 70%, and today, we announced our Board of Directors has approved an additional $1 billion share repurchase authorization. We are well positioned for the future, and remain focused on increasing shareholder value.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 2.2% to $1.91 billion in the third quarter. The figure rose 1.5% in the second quarter from the year earlier and climbed 0.9% in the first quarter from the year-ago quarter.

The company has now beaten estimates the last two quarters. In the third quarter, it topped expectations with net income of $1.18 versus a mean estimate of net income of $1.11 per share.

Gross margins grew 1.9 percentage points to 42.7%. The growth seemed to be driven by increased revenue, as the figure rose 3% from the year earlier quarter while costs fell 0.3%.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the first quarter of the next fiscal year is $1.03 per share, a drop from $1.04. The average estimate for the fiscal year is $4.29 per share, a rise from $4.22 ninety days ago.

Competitors to Watch: Laboratory Corp. of America Hldgs. (NYSE:LH), Clarient, Inc. (NASDAQ:CLRT), Psychemedics Corp. (NASDAQ:PMD), Bio-Reference Laboratories, Inc. (NASDAQ:BRLI), MEDTOX Scientific, Inc. (NASDAQ:MTOX), Celera Corporation (NASDAQ:CRA), Enzo Biochem, Inc. (NYSE:ENZ), Orchid Cellmark, Inc. (NASDAQ:ORCH) and RadNet Inc. (NASDAQ:RDNT).

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

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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