Insulet (PODD) Down 7.5% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Insulet (PODD). Shares have lost about 7.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Insulet due for a breakout? 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.

Insulet Q4 Earnings Lag Estimates, Revenues Beat

Insulet announced fourth-quarter fiscal 2019 GAAP earnings per share of 8 cents, down 50% year over year. The metric also missed the Zacks Consensus Estimate by a penny.

Full-year GAAP earnings per share were 19 cents, reflecting a 280% surge from 5 cents reported a year ago. However, the company beat the Zacks Consensus Estimate by a penny.

Revenues in Detail

Revenues in the fourth quarter totaled $209.4 million, beating the Zacks Consensus Estimate by 5.9%. Moreover, the top line grew 26.9% from the year-ago number.

Full-year revenues were $738.2 million, reflecting a 30.9% increase from the year-ago period. Revenues beat the Zacks Consensus Estimate by 1.6%.

Segment in Detail

Insulet delivered fourth-quarter U.S. Omnipod revenues of $126.7 million, reflecting an increase of 36% year over year.

International Omnipod revenues of $65.8 million were up 20%.

The Drug Delivery business’ revenues totaled $16.9 million, up 1% year over year.

Margins

Gross profit in the reported quarter was $134.1 million, up 21.6% from the prior-year quarter. However, gross margin of 64% contracted 285 basis points (bps).

However, operating profit rose 12.3% to $18 million. Total operating expenses of $116 million escalated 23.2% from the year-ago figure, leading to a 113-bps contraction in the operating margin to 8.7%.

2020 Guidance

For the year, the company expects revenues of 14-18%, including an adverse foreign currency impact of 1%. The Zacks Consensus Estimate for the metric is pegged at $865.2 million.

Total Omnipod revenues are expected to be 17-21%, including an adverse foreign currency impact of 1%. U.S. Omnipod revenues are likely to be 18-22%, whereas International Omnipod revenue growth is projected to be 16-20% (including an adverse foreign currency impact of 1%). However, revenues in the Drug Delivery segment are expected to decline 15-20%.

For the first quarter of 2020, Insulet projects revenues of 17-20%, including an adverse foreign currency impact of 1%. The Zacks Consensus Estimate for the metric is pegged at $193.9 million.

Total Omnipod revenues are expected to be 23-26%, including an adverse foreign currency impact of 1%. U.S. Omnipod revenues are likely to be 27-29%, whereas International Omnipod revenue growth is projected to be 17-20% (including an adverse foreign currency impact of 3%). However, revenues in the Drug Delivery segment are expected to decline 28-34%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -113.53% due to these changes.

VGM Scores

At this time, Insulet has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Insulet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.