Covidien Beats Estimates Yet Again

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Covidien (NYS: COV) reported earnings on Jan. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 30 (Q1), Covidien met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew, and GAAP earnings per share grew.

Margins expanded across the board.

Revenue details
Covidien reported revenue of $2.90 billion. The 16 analysts polled by S&P Capital IQ predicted a top line of $2.92 billion. Sales were 4.7% higher than the prior-year quarter's $2.77 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $1.13. The 20 earnings estimates compiled by S&P Capital IQ forecast $1.03 per share on the same basis. GAAP EPS of $0.92 for Q1 were 19% higher than the prior-year quarter's $0.86 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 58.7%, 110 basis points better than the prior-year quarter. Operating margin was 22.4%, 20 basis points better than the prior-year quarter. Net margin was 17.0%, 160 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.90 billion. On the bottom line, the average EPS estimate is $1.03.

Next year's average estimate for revenue is $11.84 billion. The average EPS estimate is $4.29.

Investor sentiment
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Covidien is buy, with an average price target of $58.63.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Covidien. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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