Edwards Lifesciences (NYSE:EW) Q3 2020 Earnings Preview

in EARNINGS/INVESTING IDEAS by

Edwards Lifesciences Corporation (NYSE:EW) is scheduled to report Q3 earnings results after markets close for trading on October 21, 2020.

The company is expected to report earnings of $0.44/share on revenue of $1.08 billion. The consensus earnings per share (EPS) of $0.44/share is based on a poll of 21 analysts and represents a decline in eps of −5.7% over the same quarter last year, when the company reported earnings of $0.47/share.

The revenue forecast of $1.08 billion based on a poll of 20 analysts implies a year-over-year (YoY) decline in revenue of −1.3%. Last year the company reported $1.094 billion in revenue for the quarter.

Expected to report EPS contraction of −5.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,079.77 $1,094.00 −1.3%
EPS $0.44 $0.47 −5.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, missed 1 quarters, and met expectations 1 quarters.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.19 $0.34 82.2% Beat
Q1, 2020 $0.41 $0.50 23.3% Beat
Q4, 2019 $0.50 $0.49 −1.7% Missed
Q3, 2019 $0.41 $0.47 15.8% Beat
Q2, 2019 $0.44 $0.46 3.9% Beat
Q1, 2019 $0.41 $0.44 7.9% Beat
Q4, 2018 $0.39 $0.39 0.0% Missed
Q3, 2018 $0.34 $0.36 5.3% 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 June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 23, 2020 $77.91 $78.13 0.3% Increase
April 23, 2020 $72.17 $74.49 3.2% Increase
January 30, 2020 $77.58 $73.29 −5.5% Decline
October 23, 2019 $74.03 $76.29 3.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.92, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.92 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Edwards Lifesciences Corporation is currently trading at $85.15/share, down −0.2% for the day. The company is trading at approximately 98.5% of its 52-week high of $87.79/share. The company’s stock price is up 9.0% since the last earnings report and up 0.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 58.65 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:EW Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 71.77 and a forward P/E multiple of 46.00.

Edwards Lifesciences Corporation’s current share price also implies a price-to-book (P/B) multiple of 13.90. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $85.15
P/E Ratio 71.8x
P/E Ratio (Fwd) 46.0x
PEG Ratio 18.9
Total Debt / Total Capital 1.3%
Levered Free Cash Flow $936.8 million
EV / EBITDA 38.9x

Finbox

Edwards Lifesciences Corporation is a large-cap stock with a market capitalization of $53.053 billion and a total enterprise value of $52.574 billion. The company operates in the Healthcare sector and the Healthcare Equipment & Supplies industry.

Edwards Lifesciences Corporation provides products and technologies for structural heart disease, and critical care and surgical monitoring in the United States and internationally. It offers transcatheter heart valve replacement products for the minimally invasive replacement of heart valves; and transcatheter heart valve repair and replacement products to treat mitral and tricuspid valve diseases. The company also provides surgical heart valve therapy products, such as pericardial valves for aortic and mitral surgical valve replacement; aortic heart valves; annuloplasty rings; cardiac cannula devices; beating heart mitral valve repair system for the treatment of degenerative mitral valve diseases, as well as various procedure-enabling platforms to advance minimally invasive surgery. In addition, it offers critical care products, such as hemodynamic monitoring systems to measure a patient’s heart function and fluid status in surgical and intensive care settings; pulmonary artery catheters; arterial pressure monitoring products oximetry central venous catheters, as well as monitoring platforms that display a patient’s physiological information; and Acumen Hypotension Prediction Index, which alerts clinicians in advance of a patient developing low blood pressure. The company distributes its products through direct sales force and independent distributors. Edwards Lifesciences Corporation was founded in 1958 and is headquartered in Irvine, California.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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