Yahoo Finance Phibro (PAHC) Down 3.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Phibro Animal Health (PAHC). Shares have lost about 3.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Phibro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Phibro Q3 Earnings Surpass Estimates, Gross Margin Fall
Phibro Animal Health delivered adjusted earnings per share of 31 cents in the third quarter of fiscal 2024 compared with 29 cents in the year-ago quarter. However, the metric beat the Zacks Consensus Estimate by 6.9%.
Without adjustments, the GAAP earnings per share in the fiscal third quarter was 21 cents compared with 25 cents in the year-ago quarter.
Net Sales
In the quarter under review, net sales totaled $263.2 million, a 7.1% increase from the year-ago quarter. The figure also topped the Zacks Consensus Estimate by 4.5%.
Segmental Sales Breakup
The company conducts its operations via three segments — Animal Health, Mineral Nutrition and Performance Products.
In the third quarter of fiscal 2024, Animal Health’s net sales increased 10.3% to $181.3 million. The figure surpassed our model’s projected revenues of $171.5 million.
Within the segment, net sales of medicated feed additives (MFAs) and others reflected 16% year-over-year growth. The uptick was driven by the increased demand for MFAs in both domestic and international regions.
Nutritional specialty product sales decreased 11%, primarily due to lower demand for microbial and dairy products. However, net vaccine sales showed a year-over-year rise of 26%, mostly due to poultry product introductions in Latin America, along with an increase in domestic and international demand.
Net sales in the Mineral Nutrition segment rose 2.1% year over year to $64.2 due to increased sales volume, partially offset by the decreased average selling price. Our model projected the segment’s revenues to be $61.1 million.
Net sales in the Performance Products segment fell 3.3% to $17.7 million as a result of the decreased demand for personal care product ingredients and industrial chemicals. Our model projected the segment to report $17.4 million in revenues.
Margins
Phibro’s fiscal third-quarter gross profit rose 5.3% year over year to $79.6 million. However, the gross margin contracted 53 basis points (bps) to 30.2% on a 7.9% rise in the cost of goods sold.
SG&A expenses in the reported quarter were $59.7 million, up 4.7% from the year-ago quarter’s levels. The operating profit rose 7% year over year to $19.9 million.
Financial Update
The company exited the third quarter of fiscal 2024 with cash and short-term investments of $98.7 million compared with $92.5 million at the end of the fiscal second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $11.4 million compared with $6.3 million in the year-ago period.
Guidance
Phibro reaffirmed its outlook for fiscal 2024 provided at the second quarter’s earnings call.
The company expects net sales between $980 million and $1.020 billion (unchanged). The Zacks Consensus Estimate for the metric is pegged at $994.2 million.
Adjusted earnings per share is expected in the range of $1.04-$1.16 (unchanged). The Zacks Consensus Estimate is pegged at $1.12.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -8.11% due to these changes.
VGM Scores
Currently, Phibro has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Phibro has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Phibro is part of the Zacks Medical - Products industry. Over the past month, Bio-Rad Laboratories (BIO), a stock from the same industry, has gained 4.2%. The company reported its results for the quarter ended March 2024 more than a month ago.
Bio-Rad reported revenues of $610.82 million in the last reported quarter, representing a year-over-year change of -9.8%. EPS of $2.29 for the same period compares with $3.34 a year ago.
For the current quarter, Bio-Rad is expected to post earnings of $2.03 per share, indicating a change of -32.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Bio-Rad. Also, the stock has a VGM Score of D.
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Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
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