Quest Diagnostics Earnings: Here’s Why Investors Don’t Like These Results

Quest Diagnostics Inc. (NYSE:DGX) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 2.40%.

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Quest Diagnostics Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 16.82% to $0.89 in the quarter versus EPS of $1.07 in the year-earlier quarter.

Revenue: Decreased 7.74% to $1.79 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Quest Diagnostics Inc. reported adjusted EPS income of $0.89 per share. By that measure, the company missed the mean analyst estimate of $1.03. It missed the average revenue estimate of $1.86 billion.

Quoting Management: “Our primary focus in 2013 is driving operational excellence and restoring growth, which are two elements of our five-point strategy. We continued to make excellent progress with our Invigorate cost-reduction initiative, which mitigated much of the bottom line impact from the revenue softness. Additionally, we are refocusing on diagnostic information services and delivering disciplined capital deployment. We completed the previously announced sale of HemoCue and plan to deploy the $300 million in proceeds into share repurchases. In addition, we announced the planned acquisition of outreach testing operations of Dignity Health in California and Nevada, and expect to complete additional fold-in acquisitions, consistent with our goal of contributing 1-2% revenue growth per year through strategically aligned, accretive acquisitions.”

Key Stats (on next page)…

Revenue increased 5.85% from $1.69 billion in the previous quarter. EPS decreased 11.88% from $1.01 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.23 to a profit $1.13. For the current year, the average estimate has moved down from a profit of $4.83 to a profit of $4.41 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)