Hill-Rom (NYSE:HRC) Q4 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Hill-Rom Holdings, Inc. (NYSE:HRC) is scheduled to report Q4 earnings results on November 6, 2020.

The company is expected to report earnings of $1.07/share on revenue of $698.3 million. The consensus earnings per share (EPS) of $1.07/share is based on a poll of 8 analysts and represents a decline in eps of −36.6% over the same quarter last year, when the company reported earnings of $1.69/share.

The revenue forecast of $698.3 million based on a poll of 7 analysts implies a year-over-year (YoY) decline in revenue of −10.8%. Last year the company reported $782.8 million in revenue for the quarter.

Expected to report EPS contraction of −36.6% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $698.33 $782.80 −10.8%
EPS $1.07 $1.69 −36.6%

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 Hill-Rom Holdings, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 $1.46 $1.95 33.4% Beat
Q2, 2020 $1.15 $1.28 11.0% Beat
Q1, 2020 $1.08 $1.13 4.4% Beat
Q4, 2019 $1.65 $1.69 2.5% Beat
Q3, 2019 $1.22 $1.23 1.2% Beat
Q2, 2019 $1.11 $1.14 3.1% Beat
Q1, 2019 $0.98 $1.02 3.6% Beat
Q4, 2018 $1.51 $1.63 7.9% 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 −16.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 31, 2020 $115.68 $97.22 −16.0% Decline
May 1, 2020 $112.49 $102.25 −9.1% Decline
January 24, 2020 $112.81 $109.64 −2.8% Decline
November 1, 2019 $104.69 $107.91 3.1% 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 −2.68, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.68 implies a 0.4% chance of earnings manipulation.

Fundamentals And Technical Analysis

Hill-Rom Holdings, Inc. is currently trading at $91.07/share, down −1.9% for the day. The company is trading at approximately 77.4% of its 52-week high of $117.68/share. The company’s stock price is down −6.3% since the last earnings report and down −1.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 56.99 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:HRC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 29.09 and a forward P/E multiple of 16.95.

Hill-Rom Holdings, Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.67. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date June 30, 2020
Stock Price (Current) $91.07
P/E Ratio 29.1x
P/E Ratio (Fwd) 16.9x
PEG Ratio −11.2
Total Debt / Total Capital 25.9%
Levered Free Cash Flow $320.6 million
EV / EBITDA 12.5x

Finbox

Hill-Rom Holdings, Inc. is a mid-cap stock with a market capitalization of $6.066 billion and a total enterprise value of $7.896 billion. The company operates in the Healthcare sector and the Healthcare Equipment & Supplies industry.

Hill-Rom Holdings, Inc. operates as a medical technology company worldwide. It operates in Patient Support Systems, Front Line Care, and Surgical Solutions segments. The company offers medical surgical beds, intensive care unit beds, and bariatric patient beds, lifts and other devices, non-invasive therapeutic products and surfaces, and information technologies and software solutions, as well as sells equipment service contracts for its capital equipment. It also provides patient monitoring and diagnostics products, such as patient exam and diagnostics, patient monitoring, diagnostic cardiology, vision screening, and diagnostics products; and respiratory health products comprising Vest System, VitalCough System, MetaNeb System, Monarch, and Life2000 systems to assist patients in the mobilization of retained blockages. In addition, the company offers surgical solutions that include surgical tables, lights, and pendants; positioning devices for use in shoulder, hip, spinal, and lithotomy surgeries, as well as platform-neutral positioning accessories for operating room tables. Further, it is involved in the sales and rental of products to acute and extended care facilities through direct sales force and distributors; sales and rental of products directly to patients in the home; and sales to primary care facilities through distributors. Additionally, the company offers continuum of clinical care, including acute care and primary care, as well as clinical research organizations. Hill-Rom Holdings, Inc. was founded in 1969 and is headquartered in Chicago, Illinois.

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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