Thermo Fisher Scientific (NYSE:TMO) Q3 2020 Earnings Preview

in EARNINGS/INVESTING IDEAS by

Thermo Fisher Scientific Inc. (NYSE:TMO) is scheduled to report Q3 earnings results before markets open for trading on October 21, 2020.

The company is expected to report earnings of $4.30/share on revenue of $7.676 billion. The consensus earnings per share (EPS) of $4.30/share is based on a poll of 18 analysts and represents a growth in eps of 46.4% over the same quarter last year, when the company reported earnings of $2.94/share.

The revenue forecast of $7.676 billion based on a poll of 16 analysts implies a year-over-year (YoY) growth in revenue of 22.4%. Last year the company reported $6.272 billion in revenue for the quarter.

Expected to report EPS growth of 46.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $7,675.80 $6,272.00 22.4%
EPS $4.30 $2.94 46.4%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Thermo Fisher Scientific Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $2.89 $3.89 34.6% Beat
Q1, 2020 $2.82 $2.94 4.3% Beat
Q4, 2019 $3.54 $3.55 0.4% Beat
Q3, 2019 $2.89 $2.94 1.8% Beat
Q2, 2019 $3 $3.04 1.4% Beat
Q1, 2019 $2.74 $2.81 2.7% Beat
Q4, 2018 $3.18 $3.25 2.3% Beat
Q3, 2018 $2.56 $2.62 2.2% 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 27, 2020, the stock price reacted by increasing 1.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 22, 2020 $403.09 $410.48 1.8% Increase
April 22, 2020 $319.62 $320.51 0.3% Increase
January 30, 2020 $333.89 $313.19 −6.2% Decline
October 23, 2019 $280.99 $293.44 4.4% 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 −2.55, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.55 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Thermo Fisher Scientific Inc. is currently trading at $465.57/share, down −0.6% for the day. The company is trading at approximately 99.1% of its 52-week high of $473.84/share. The company’s stock price is up 13.4% since the last earnings report and down −0.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 73.26 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:TMO Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 50.07 and a forward P/E multiple of 29.27.

Thermo Fisher Scientific Inc.’s current share price also implies a price-to-book (P/B) multiple of 6.21. 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 27, 2020
Stock Price (Current) $465.57
P/E Ratio 50.1x
P/E Ratio (Fwd) 29.3x
PEG Ratio 9.1
Total Debt / Total Capital 10.3%
Levered Free Cash Flow $4.245 billion
EV / EBITDA 28.9x

Finbox

Thermo Fisher Scientific Inc. is a large-cap stock with a market capitalization of $185.4 billion and a total enterprise value of $200.9 billion. The company operates in the Healthcare sector and the Life Sciences Tools & Services industry.

Thermo Fisher Scientific Inc. provides analytical and other instruments, laboratory equipment, software, consumables, reagents, instrument systems, chemicals, supplies, and services worldwide. The company’s Life Sciences Solutions segment offers reagents, instruments, and consumables for biological and medical research, discovery and production of new drugs and vaccines, and diagnosis of diseases to pharmaceutical, biotechnology, agricultural, clinical, academic, and government markets. Its Analytical Instruments segment provides instruments, consumables, software, and services for use in laboratory, on production line, and in field for pharmaceutical, biotechnology, academic, government, environmental, and research and industrial markets, as well as clinical laboratories. The company’s Specialty Diagnostics segment offers liquid, ready-to-use, and lyophilized immunodiagnostic reagent kits, as well as calibrators, controls, and calibration verification fluids; blood-test systems and antibody tests; dehydrated and prepared culture media, collection and transport systems, instrumentation, and consumables; cancer diagnosis and medical research products; human leukocyte antigen typing and testing for organ transplant market; and healthcare products. Its Laboratory Products and Services segment provides laboratory refrigerators and freezers, and ultralow-temperature freezers and cryopreservation storage tanks; temperature control, sample preparation and preservation, centrifugation, and biological safety cabinet products; water analysis instruments; laboratory plastics and chemicals; and pharma services. It has collaboration with WuXi Diagnostics and Mayo Clinic to develop antibodies tests; a strategic collaboration with Schrödinger, Inc. to expand structure-based drug discovery to novel targets using Cryo-EM; and an agreement with Daiichi Sankyo to co-develop a companion diagnostic. The company was incorporated in 1956 and is headquartered in Waltham, Massachusetts.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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