Watson Pharmaceuticals Inc. Earnings: Strong Revenue Helps Net Income

S&P 500 (NYSE:SPY) component Watson Pharmaceuticals Inc. (NYSE:WPI) reported higher profit for the first quarter as revenue showed growth. Watson Pharmaceuticals develops, manufactures, markets, sells and distributes pharmaceutical products.

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Watson Pharmaceuticals Earnings Cheat Sheet for the First Quarter

Results: Net income for Watson Pharmaceuticals Inc. rose to $54.8 million (43 cents per share) vs. $45.3 million (36 cents per share) in the same quarter a year earlier. This marks a rise of 21% from the year-earlier quarter.

Revenue: Rose 73.9% to $1.52 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Watson Pharmaceuticals Inc. reported adjusted net income of $1.64 per share. By that measure, the company beat the mean estimate of $1.60 per share. It beat the average revenue estimate of $1.48 billion.

Quoting Management: “Substantial double-digit revenue growth across our three businesses – Global Generics, Global Brands and Anda distribution – drove an 84 percent increase in non-GAAP earnings per share, and a $151 million increase in Adjusted EBITDA” said Paul Bisaro, President and CEO.

Key Stats:

The company has now seen its net income rise for three quarters in a row. In the fourth quarter of the last fiscal year, net income rose more than fivefold and in the third quarter of the last fiscal year, the figure rose more than twofold.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 2 cents in the fourth quarter of the last fiscal year, by 4 cents in the third quarter of the last fiscal year, and by one cent in the second quarter of the last fiscal year.

Gross margin shrank 7.3 percentage points to 40.7%. The contraction appeared to be driven by increased costs, which rose 98.5% from the year earlier quarter while revenue rose 73.9%.

Revenue has risen for the last four quarters. Revenue increased 62.1% to $1.54 billion in the fourth quarter of the last fiscal year. The figure rose 22.6% in the third quarter of the last fiscal year from the year earlier and climbed 23.6% in the second quarter of the last fiscal year from the year-ago quarter.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the second quarter has risen to $1.39 per share from $1.34. For the fiscal year, the average estimate has moved up from $5.54 a share to $5.78 over the last ninety days.

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

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