Premier Q1 Earnings: Is NasdaqGS:PINC Cheap at 7.0x Price/EPS?

in EARNINGS/INVESTING IDEAS by

Premier, Inc. (NasdaqGS:PINC) is scheduled to report Q1 earnings results on November 2, 2020.

The company is expected to report earnings of $0.49/share on revenue of $305 million. The consensus earnings per share (EPS) of $0.49/share is based on a poll of 18 analysts and represents a decline in eps of −28.3% over the same quarter last year, when the company reported earnings of $0.68/share.

The revenue forecast of $305 million based on a poll of 17 analysts implies a year-over-year (YoY) growth in revenue of 0.9%. Last year the company reported $302.4 million in revenue for the quarter.

Expected to report EPS contraction of −28.3% for Q1, 2021
Metric Expected Prior Year YoY Change
Revenue $305.02 $302.41 0.9%
EPS $0.49 $0.68 −28.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from Premier, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2020 $0.61 $0.58 −4.8% Missed
Q3, 2020 $0.71 $0.73 2.9% Beat
Q2, 2020 $0.68 $0.74 8.0% Beat
Q1, 2020 $0.66 $0.68 3.6% Beat
Q4, 2019 $0.65 $0.68 4.2% Beat
Q3, 2019 $0.76 $0.66 −13.6% Missed
Q2, 2019 $0.75 $0.66 −12.1% Missed
Q1, 2019 $0.60 $0.65 7.7% 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 reacted by falling −6.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 25, 2020 $33.70 $31.36 −6.9% Decline
May 5, 2020 $31.35 $30.25 −3.5% Decline
February 4, 2020 $34.93 $31.64 −9.4% Decline
November 5, 2019 $33.42 $37.29 11.6% 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 −2.11, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.11 implies a 1.8% chance of earnings manipulation.

Fundamentals And Technical Analysis

Premier, Inc. is currently trading at $34.16/share, down −0.7% for the day. The company is trading at approximately 86.0% of its 52-week high of $39.70/share. The company’s stock price is up 8.9% since the last earnings report and up 1.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 58.23 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:PINC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 6.97 and a forward P/E multiple of 15.68.

Premier, Inc.’s current share price also implies a price-to-book (P/B) multiple of 29.95. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q4
Period End Date June 30, 2020
Stock Price (Current) $34.16
P/E Ratio 7.0x
P/E Ratio (Fwd) 15.7x
PEG Ratio 0.0
Total Debt / Total Capital 3.4%
Levered Free Cash Flow $255.1 million
EV / EBITDA 7.5x

Finbox

Premier, Inc. is a mid-cap stock with a market capitalization of $4.17 billion and a total enterprise value of $4.218 billion. The company operates in the Healthcare sector and the Healthcare Providers & Services industry.

Premier, Inc., together with its subsidiaries, operates as a healthcare improvement company in the United States. It operates through two segments, Supply Chain Services and Performance Services. The Supply Chain Services segment offers its members with access to a range of products and services, including medical and surgical products, pharmaceuticals, laboratory supplies, capital equipment, information technology, facilities and construction, and food and nutritional products, as well as purchased services, such as clinical engineering and document shredding services. It is also involved in the provision of the ASCEND Collaborative service for members to receive group purchasing programs, tiers, and prices, as well as managed services; SURPASS Collaborative service; STOCKD, an e-commerce platform; and PROVIDEGX program, which identifies supply sources for drugs that are on or may be at risk of being added to the national drug shortage list, or that are vulnerable to pricing volatility, as well as direct sourcing business. The Performance Services segment offers PremierConnect for members to address existing cost and quality imperatives, enable them manage a value-based care reimbursement model, and support their regulatory reporting framework; performance improvement collaborative; and consulting and insurance services. This segment’s various PremierConnect domains include PremierConnect Quality & Regulatory, PremierConnect Clinical Surveillance & Safety, PremierConnect Supply Chain & ERP, PremierConnect Operations, PremierConnect Enterprise Analytics, and PREMIERCONNECT Clinical Decision Support domains. Premier, Inc. has a collaboration to develop a same-day breast cancer diagnosis and treatment model. The company was incorporated in 2013 and is headquartered in Charlotte, North Carolina.

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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