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Q3 Earnings Preview for Baxter International (NYSE:BAX)

in EARNINGS/INVESTING IDEAS by

Baxter International Inc. (NYSE:BAX) is scheduled to report Q3 earnings results on October 29, 2020.

The company is expected to report earnings of $0.72/share on revenue of $2.836 billion. The consensus earnings per share (EPS) of $0.72/share is based on a poll of 16 analysts and represents a decline in eps of −8.1% over the same quarter last year, when the company reported earnings of $0.79/share.

The revenue forecast of $2.836 billion based on a poll of 15 analysts implies a year-over-year (YoY) decline in revenue of −0.5%. Last year the company reported $2.851 billion in revenue for the quarter.

Expected to report EPS contraction of −8.1% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $2,835.88 $2,851.00 −0.5%
EPS $0.72 $0.79 −8.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.71 $0.64 −10.1% Missed
Q1, 2020 $0.74 $0.82 11.0% Beat
Q4, 2019 $0.88 $0.97 10.0% Beat
Q3, 2019 $0.84 $0.79 −6.0% Missed
Q2, 2019 $0.81 $0.89 9.6% Beat
Q1, 2019 $0.68 $0.76 11.6% Beat
Q4, 2018 $0.73 $0.78 6.8% Beat
Q3, 2018 $0.74 $0.80 8.0% 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 −4.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $90.73 $86.38 −4.8% Decline
April 30, 2020 $91.49 $87.84 −4.0% Decline
March 17, 2020 $71.57 $84.59 18.2% Increase
October 24, 2019 $87.95 $77.28 −12.1% 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 −2.79, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.79 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Baxter International Inc. is currently trading at $80.01/share, down −1.3% for the day. The company is trading at approximately 84.1% of its 52-week high of $95.19/share. The company’s stock price is down −7.4% since the last earnings report and down −1.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 43.96 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:BAX Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 43.84 and a forward P/E multiple of 26.06.

Baxter International Inc.’s current share price also implies a price-to-book (P/B) multiple of 4.98. 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 30, 2020
Stock Price (Current) $80.01
P/E Ratio 43.8x
P/E Ratio (Fwd) 26.1x
PEG Ratio −1.2
Total Debt / Total Capital 14.7%
Levered Free Cash Flow $1.502 billion
EV / EBITDA 15.8x

Finbox

Baxter International Inc. is a large-cap stock with a market capitalization of $40.504 billion and a total enterprise value of $43.53 billion. The company operates in the Healthcare sector and the Healthcare Equipment & Supplies industry.

Baxter International Inc., through its subsidiaries, develops and provides a portfolio of healthcare products. The company operates through North and South America; Europe, Middle East and Africa; and Asia-Pacific segments. The company offers peritoneal dialysis and hemodialysis, and additional dialysis therapies and services; renal replacement therapies and other organ support therapies focused in the intensive care unit; sterile intravenous (IV) solutions, IV therapies, infusion pumps, administration sets, and drug reconstitution devices; and parenteral nutrition therapies. It also provides biological products and medical devices, and surgical hemostat and sealant products used in surgical procedures for hemostasis, tissue sealing, and adhesion prevention; premixed and oncology drug platforms, inhaled anesthesia and critical care products, and pharmacy compounding services; and generic injectable pharmaceuticals. Its products are used in hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors’ offices, and patients at home under physician supervision. The company sells its products through direct sales force, as well as through independent distributors, drug wholesalers, and specialty pharmacy or other alternate site providers in approximately 100 countries. It has an agreement with Celerity Pharmaceutical, LLC to develop acute care generic injectable premix and oncolytic molecules. Baxter International Inc. was founded in 1931 and is headquartered in Deerfield, Illinois.

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