Luminex (LMNX) Up 13.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Luminex (LMNX). Shares have added about 13.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Luminex 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.

Luminex Earnings and Revenues Beat Estimates in Q4

Luminex Corporation reported fourth-quarter 2019 adjusted earnings of 7 cents per share, beating the Zacks Consensus Estimate of break-even. Notably, the company reported a loss of 5 cents per share in the year-ago quarter.

Revenues in Detail

Revenues came in at $90.5 million, beating the Zacks Consensus Estimate by 0.6%. Moreover, the top line improved 11.5% on a year-over-year basis.
Total sample-to-answer franchise revenues grew 15% from the prior-year quarter.

2019 at a Glance

In 2019, the company reported revenues worth $334.6 million, which improved 5.9% from the previous year.

The company reported full-year 2019 loss of 9 cents per share, narrower than the Zacks Consensus Estimate loss of 29 cents per share. The company reported earnings of 41 cents per share in 2018.

Segmental Analysis

System Sales

Revenues at this segment totaled $20.8 million, skyrocketed 103.5% from the year-ago quarter.

Consumable Sales

This segment accounted for $11.7 million of revenues, down 25.2% year over year.

Royalty Revenues

Royalty revenues totaled $13.6 million, up 0.4% on a year-over-year basis.

Assay Revenues

This segment reported revenues worth $36.4 million, down 1.6% on a year-over-year basis.

Service Revenues

Revenues in the segment amounted to $5.7 million, up 75.2% from the year-ago quarter.

Other

Other revenues came in at $2.4 million, up 54.6% from the prior-year quarter.

Financial Update

As of Dec 31, 2019, cash and cash equivalents totaled $59.2 million, down 22.6% from the prior-year quarter.

Cumulative cash flow from operating activities for the three months ended Dec 31, 2019, came in at $5.3 million, up 23.7% from the year-ago quarter.

Margins

Gross profit in the reported quarter was $49.9 million, up 3.2% year over year. Gross margin was 55.1%, contracting 450 (basis points) bps.

Research and development expenses totaled $12.9 million, down 1.8% year over year. Selling, general and administrative expenses in the fourth quarter were $31.1 million, down 2.9% year over year. Total operating expenses amounted to $46.9 million, down 1% from the year-ago reported figure.

The company reported operating income of $5.7 million, which increased significantly from the year-ago quarter’s operating income of $0.9 million. Operating margin of 6.2% expanded 500 bps from the year-ago quarter.

2020 Guidance

Luminex projects first-quarter 2020 revenue to range between $82 million and $84 million.

The company reiterated full-year 2020 revenue outlook of $352-$362 million. The mid-point of this guidance is 7% higher than that of the previous year. The Zacks Consensus Estimate is pegged at $357.5 million.

Notably, the full-year outlook includes around 2-3% headwind associated with the exit of certain remaining sales to LabCorp.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -233.33% due to these changes.

VGM Scores

At this time, Luminex has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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

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