DepoMed Beats on Both Top and Bottom Lines

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DepoMed (NAS: DEPO) reported earnings yesterday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), DepoMed beat expectations on revenues and exceeded expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped significantly, and GAAP earnings per share contracted to a loss.

Gross margins increased, operating margins shrank, and net margins dropped.

Revenue details
DepoMed tallied revenue of $12.1 million. The five analysts polled by S&P Capital IQ anticipated net sales of $10.8 million on the same basis. GAAP reported sales were 42% lower than the prior-year quarter's $20.9 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at -$0.25. The five earnings estimates compiled by S&P Capital IQ predicted -$0.31 per share. GAAP EPS were -$0.25 for Q4 versus $0.03 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 94.9%, 30 basis points better than the prior-year quarter. Operating margin was -283.1%, 28,890 basis points worse than the prior-year quarter. Net margin was -291.6%, 29,980 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $12.1 million. On the bottom line, the average EPS estimate is -$0.25.

Next year's average estimate for revenue is $67.2 million. The average EPS estimate is -$0.69.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 237 members rating the stock outperform and 16 members rating it underperform. Among 50 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 47 give DepoMed a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on DepoMed is buy, with an average price target of $7.67.

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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. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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