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Q3 Earnings Preview for Orthofix Medical (NasdaqGS:OFIX)

in EARNINGS/INVESTING IDEAS by

Orthofix Medical Inc. (NasdaqGS:OFIX) is scheduled to report Q3 earnings results before markets open for trading on November 5, 2020.

The company is expected to report earnings of -$0.14/share on revenue of $86.583 million. The consensus earnings per share (EPS) of -$0.14/share is based on a poll of 4 analysts and represents a decline in eps of −133.5% over the same quarter last year, when the company reported earnings of $0.41/share.

The revenue forecast of $86.583 million based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −23.7%. Last year the company reported $113.5 million in revenue for the quarter.

Expected to report EPS of -$0.14/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $86.58 $113.50 −23.7%
EPS -$0.14 $0.41 −133.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.75 -$0.59 21.3% Beat
Q1, 2020 $0.06 $0.09 50.0% Beat
Q4, 2019 $0.58 $0.51 −12.4% Missed
Q3, 2019 $0.51 $0.41 −19.6% Missed
Q2, 2019 $0.42 $0.28 −32.9% Missed
Q1, 2019 $0.36 $0.27 −25.8% Missed
Q4, 2018 $0.48 $0.55 15.1% Beat
Q3, 2018 $0.36 $0.43 18.8% 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 increasing 4.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $33.24 $34.72 4.5% Increase
May 8, 2020 $36.16 $36.54 1.1% Increase
February 24, 2020 $45.04 $36.70 −18.5% Decline
October 28, 2019 $50 $41.62 −16.8% 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 −3.60, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.60 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Orthofix Medical Inc. is currently trading at $31.26/share, down −1.3% for the day. The company is trading at approximately 65.2% of its 52-week high of $47.91/share. The company’s stock price is down −10.0% since the last earnings report and down −6.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 41.19 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:OFIX Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −28.01 and a forward P/E multiple of −63.74.

Orthofix Medical Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.75. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $31.26
P/E Ratio −28.0x
P/E Ratio (Fwd) −63.7x
PEG Ratio 0.1
Total Debt / Total Capital 17.3%
Levered Free Cash Flow $38.581 million
EV / EBITDA 27.0x

Finbox

Orthofix Medical Inc. is a small-cap stock with a market capitalization of $604.2 million and a total enterprise value of $559.6 million. The company operates in the Healthcare sector and the Healthcare Equipment & Supplies industry.

Orthofix Medical Inc., a medical device company, provides musculoskeletal healing products and therapies worldwide. It operates through two segments, Global Spine and Global Extremities. The Global Spine segment manufactures, distributes, and provides support services for bone growth stimulator devices that enhance bone fusion as well as used as a therapeutic treatment for non-spinal appendicular fractures. This segment also designs, develops, and markets a portfolio of motion preservation and fixation implant products, which are used in surgical procedures of the spine; and a portfolio of regenerative products and tissue forms that allow physicians to treat a range of spinal and orthopedic conditions. The Global Extremities segment designs, develops, and markets orthopedic products that are used in fracture repair, deformity correction, and bone reconstruction procedures. The company markets and distributes its products through direct sales representatives; independent distributors; and employed and independent sales representatives to physicians, hospitals, ambulatory surgery centers, integrated health delivery systems, and other purchasing organizations. The company was formerly known as Orthofix International N.V. and changed its name to Orthofix Medical Inc. in July 2018. Orthofix Medical Inc. was founded in 1987 and is headquartered in Lewisville, Texas.

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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