Waters Q4 Earnings: Can WAT Hit Its $3.01 EPS Target?

in EARNINGS/INVESTING IDEAS by

Waters Corporation (NYSE:WAT) is scheduled to report Q4 earnings results on February 4, 2020. Webcast details can be found here.

The company is expected to report earnings of $3.01/share on revenue of $715.7 million. The consensus earnings per share (EPS) of $3.01/share is based on a poll of 15 analysts and represents a growth of 4.9% over the same quarter last year when the company reported earnings of $2.87/share.

The revenue forecast of $715.7 million based on a poll of 13 analysts implies a year-over-year (YoY) growth of 0.1%. Last year the company reported $715 million in revenue for the quarter.

Expected to report EPS growth of $0.14/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $715.70 $715.02 0.1%
EPS $3.01 $2.87 4.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Waters for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $2.13 $2.13 0.2% Beat
Q2, 2019 $2.11 $2.14 1.4% Beat
Q1, 2019 $1.73 $1.60 -7.2% Missed
Q4, 2018 $2.64 $2.87 8.6% Beat
Q3, 2018 $1.90 $1.92 1.1% Beat
Q2, 2018 $1.92 $1.95 1.7% Beat
Q1, 2018 $1.55 $1.59 2.6% Beat
Q4, 2017 $2.46 $2.51 2.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending September 28, 2019, the stock price reacted by falling by -2.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-29 $220.11 $215 -2.3% Decline
2019-07-30 $219.14 $210.56 -3.9% Decline
2019-04-23 $241.04 $207.54 -13.9% Decline
2019-01-23 $203.66 $223.71 9.8% Increase

Fundamentals And Technical Analysis

Waters is currently trading at $243.67/share, up 1.7% for the day. The company is trading at approximately 95.5% of its 52-week high of $255.21/share. The company’s stock price is up 13.3% since the last earnings report and up 5.0% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 66.13 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:WAT Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 26.8x and a forward P/E multiple of 25.7x. Waters’ current share price also implies a price-to-book (P/B) multiple of 133.7x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 28, 2019
Stock Price (Current) $243.67
P/E Ratio 26.8x
P/E Ratio (Fwd) 25.7x
PEG Ratio 22.7
Total Debt to Capital (%) 8.5%
Levered Free Cash Flow $520.7 million
Enterprise Value / EBITDA 19.8x

Source: Finbox

Company Profile: Waters Corporation

Waters Corporation is a large-cap stock with a market capitalization of $15.438 billion and a total enterprise value of $16.475 billion. The company operates in the Healthcare sector and the Life Sciences Tools & Services industry.

Waters Corporation, a specialty measurement company, provides analytical workflow solutions in Asia, the Americas, and Europe. It operates through two segments, Waters and TA.

The company designs, manufactures, sells, and services high and ultra-performance liquid chromatography, as well as mass spectrometry (MS) technology systems and support products, including chromatography columns, other consumable products, and post-warranty service plans.

It also designs, manufactures, sells, and services thermal analysis, rheometry, and calorimetry instruments; and develops and supplies software-based products that interface with its instruments, as well as other manufacturers’ instruments. Its MS technology instruments are used in drug discovery and development comprising clinical trial testing, the analysis of proteins in disease processes, nutritional safety analysis, and environmental testing.

The company offers thermal analysis, rheometry, and calorimetry instruments for use in predicting the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals, and viscous liquids for various industrial, consumer good, and healthcare products, as well as for life science research.

Its products are used by pharmaceutical, biochemical, industrial, nutritional safety, environmental, academic, and governmental customers working in research and development, quality assurance, and other laboratory applications.

The company has a collaboration agreement with The Human Glycome Project, Genos, and New England Biolabs, Inc. to accelerate glycomics research by providing goods and services to glycan analysis.

Waters Corporation was founded in 1958 and is headquartered in Milford, Massachusetts.

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