Charles River Laboratories International Q3 Earnings: Can NYSE:CRL Hit Its $1.80 EPS Target?

in EARNINGS/INVESTING IDEAS by

Charles River Laboratories International, Inc. (NYSE:CRL) is scheduled to report Q3 earnings results before markets open for trading on October 29, 2020.

The company is expected to report earnings of $1.80/share on revenue of $715.6 million. The consensus earnings per share (EPS) of $1.80/share is based on a poll of 15 analysts and represents a growth in eps of 6.4% over the same quarter last year, when the company reported earnings of $1.69/share.

The revenue forecast of $715.6 million based on a poll of 13 analysts implies a year-over-year (YoY) growth in revenue of 7.1%. Last year the company reported $668 million in revenue for the quarter.

Expected to report EPS growth of 6.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $715.63 $667.95 7.1%
EPS $1.80 $1.69 6.4%

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 Charles River Laboratories International, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.28 $1.58 23.8% Beat
Q1, 2020 $1.46 $1.84 25.7% Beat
Q4, 2019 $1.83 $2.01 9.6% Beat
Q3, 2019 $1.64 $1.69 3.0% Beat
Q2, 2019 $1.55 $1.63 5.0% Beat
Q1, 2019 $1.39 $1.40 0.7% Beat
Q4, 2018 $1.40 $1.49 6.2% Beat
Q3, 2018 $1.38 $1.53 10.6% 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 6.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $203.92 $217.80 6.8% Increase
May 7, 2020 $143.66 $159.56 11.1% Increase
February 11, 2020 $157.74 $171.33 8.6% Increase
November 6, 2019 $130.57 $127.37 −2.5% Decline

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 −2.75, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.75 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Charles River Laboratories International, Inc. is currently trading at $230.18/share, down −1.1% for the day. The company is trading at approximately 92.0% of its 52-week high of $250.29/share. The company’s stock price is up 5.7% since the last earnings report and down −1.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 48.94 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CRL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 42.14 and a forward P/E multiple of 31.71.

Charles River Laboratories International, Inc.’s current share price also implies a price-to-book (P/B) multiple of 6.52. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $230.18
P/E Ratio 42.1x
P/E Ratio (Fwd) 31.7x
PEG Ratio 1.9
Total Debt / Total Capital 17.3%
Levered Free Cash Flow $415.9 million
EV / EBITDA 21.9x

Finbox

Charles River Laboratories International, Inc. is a large-cap stock with a market capitalization of $11.435 billion and a total enterprise value of $13.493 billion. The company operates in the Healthcare sector and the Life Sciences Tools & Services industry.

Charles River Laboratories International, Inc., an early-stage contract research company, provides drug discovery, non-clinical development, and safety testing services. It operates through three segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Support (Manufacturing). The RMS segment produces and sells research model strains primarily purpose-bred rats and mice for use by researchers. It also provides a range of services to assist its clients in supporting the use of research models in research and screening non-clinical drug candidates, including genetically engineered models and services, insourcing solutions, and research animal diagnostic services. The DSA segment offers early and in vivo discovery services for the identification of a druggable target through delivery of non-clinical drug and therapeutic candidates ready for safety assessment; and safety assessment services, such as bioanalysis, drug metabolism, pharmacokinetics, safety pharmacology, toxicology, and pathology services. The Manufacturing segment provides in vitro methods for conventional and rapid quality control testing of sterile and non-sterile biopharmaceuticals, and consumer products. It also offers specialized testing of biologics that are outsourced by pharmaceutical and biotechnology companies; and avian vaccine services that provide specific-pathogen-free fertile chicken eggs, SPF chickens, and diagnostic products used to manufacture vaccines.

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