A month has gone by since the last earnings report for AptarGroup (ATR). Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AptarGroup due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AptarGroup Earnings & Revenues Top Estimates in Q4
AptarGroup delivered fourth-quarter 2018 earnings per share of 92 cents, beating the Zacks Consensus Estimate of 84 cents by a margin of 10%. Further, the bottom line grew 19% year over year and was higher than management’s guided range of 81-86 cents per share.
On a reported basis, the company recorded earnings of 62 cents per share compared with the year-ago quarter’s figure of 77 cents.
Operational Update
Total revenues improved 9% year over year to $685 million in the reported quarter. Core sales growth was at 7%, acquisitions contributed 6% while unfavorable exchange rates impacted sales by 4%. Further, the top line beat the Zacks Consensus Estimate of $664 million.
Adjusted cost of sales rose 12.6% to $447 million from $397 million recorded in the year-ago quarter. Gross profit increased 4% year over year to $238 million, while gross margin contracted 180 basis points (bps) to 34.8%. Selling, research, development and administrative expenses rose 12% year over year to $107 million. Adjusted operating income went up 8% year over year to $85.6 million. AptarGroup’s operating margin shrunk 20 bps year over year to 12.5%. Adjusted EBITDA improved 20% year over year to $141 million in the reported quarter.
Segmental Performance
Total revenues in the Beauty + Homes segment inched up 0.7% year over year to $338 million. Operating income in the reported quarter declined 8% year over year to $22.5 million.
Total revenues in the Pharma segment were up 23% year over year to $255.8 million. Operating income climbed 27% year over year to $77 million in the fourth quarter.
Total revenues in the Food + Beverage segment rose 10% year over year to $91 million. Operating income declined 48% year over year to $3.6 million.
Financial Performance
AptarGroup reported cash and cash equivalents of $262 million as of Dec 31, 2018, down from $712 million as of Dec 31, 2017. At the quarter end, long-term debt was approximately $1,126 million, down from $1,191 million as of Dec 31, 2017.
Fiscal 2018 Performance
AptarGroup reported adjusted earnings per share of $4.00 in 2018, up 13% from $3.54 in the prior year. Earnings beat the Zacks Consensus Estimate of $3.92. Including one-time items, earnings came in at $3.00 compared with $3.41 in the prior year.
Sales increased 12% year over year to $2.76 billion. The top line beat the Zacks Consensus Estimate of $2.74 billion.
Outlook
AptarGroup projects adjusted earnings per share for first-quarter 2019 to range between 95 cents and $1.00. The guidance reflects year-over-year growth of 9% at the mid-point. The guidance reflects a higher tax rate (29% to 31%) and higher estimated outstanding share count than the prior year. Negative foreign currency translation will also affect earnings as euro has weakened considerably from prior year. Nevertheless, AptarGroup expects that its core sales will grow in each segment in the current quarter. The company will also continue to focus on its cost pass-through and turnaround efforts.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -9.24% due to these changes.
VGM Scores
Currently, AptarGroup has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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. It's no surprise AptarGroup has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
AptarGroup, Inc. (ATR): Free Stock Analysis Report
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