OSI Systems Earnings Preview

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Investors are on the edge of their collective seats, hoping that OSI Systems (NAS: OSIS) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings on Tuesday, Jan. 24. OSI Systems is engaged in the design and manufacture of electronic systems and components for critical applications. It operates in three divisions: security, healthcare, and optoelectronics/manufacturing.

What analysts say:

  • Buy, sell, or hold?: Analysts are very bullish on this stock, unanimously backing it as a buy. Analysts like OSI Systems better than competitor American Science & Engineering overall. One out of four analysts rate American Science & Engineering a buy compared to three of three for OSI Systems. Analysts' rating of OSI Systems has stayed constant from three months prior.
  • Revenue forecasts: On average, analysts predict $186 million in revenue this quarter. That would represent a rise of 9.9% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.60 per share. Estimates range from $0.57 to $0.61.

What our community says:
CAPS All-Stars are solidly behind the stock with 89.7% assigning it an "outperform" rating. The community at large concurs with the All-Stars with 91.2% awarding it a rating of "outperform." Fools are bullish on OSI Systems, though the message boards have been quiet lately with only 50 posts in the past 30 days. OSI Systems' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
OSI Systems' profit has risen year over year by an average of 41.8% over the past five quarters. The company's gross margin shrank by 3.7 percentage points in the last quarter. Revenue rose 25.6% while cost of sales rose 33% to $108.5 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

32.8%

38.2%

35.6%

35.5%

Operating Margin

4.7%

9.4%

6.7%

7.9%

Net Margin

3.0%

6.6%

5.0%

5.4%

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Earnings estimates provided by Zacks.

At the time this article was published

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