Covance Beats on Both Top and Bottom Lines

Covance (NYSE: CVD  ) reported earnings on Jan. 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Covance beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded and GAAP earnings per share grew significantly.

Gross margins dropped, operating margins dropped, net margins grew.

Revenue details
Covance chalked up revenue of $562.2 million. The 13 analysts polled by S&P Capital IQ hoped for revenue of $550.3 million on the same basis. GAAP reported sales were 14% higher than the prior-year quarter's $532.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.73. The 16 earnings estimates compiled by S&P Capital IQ forecast $0.71 per share. GAAP EPS of $0.61 for Q4 were 79% higher than the prior-year quarter's $0.34 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 27.3%, 290 basis points worse than the prior-year quarter. Operating margin was 7.1%, 180 basis points worse than the prior-year quarter. Net margin was 5.6%, 160 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $561.5 million. On the bottom line, the average EPS estimate is $0.69.

Next year's average estimate for revenue is $2.31 billion. The average EPS estimate is $2.96.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 312 members out of 321 rating the stock outperform, and nine members rating it underperform. Among 112 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 110 give Covance a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Covance is outperform, with an average price target of $54.88.

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