Laboratory Corp. of America Holdings Earnings Preview

Motley Fool Staff
Updated

Laboratory Corp. of America Holdings (NYS: LH) will try to beat its earnings estimates for the fifth consecutive quarter. The company will unveil its latest earnings on Thursday, Oct. 20. Laboratory Corporation of America provides testing services used by the medical profession in patient diagnosis and in the monitoring and treatment of disease.

What analysts say:

  • Buy, sell, or hold?: Half of analysts think investors should stand pat on Laboratory Corp. of America Holdings. Analysts like Laboratory Corp. of America Holdings better than competitor Quest Diagnostics overall. Four out of 20 analysts rate Quest Diagnostics a buy compared to nine of 20 for Laboratory Corp. of America Holdings. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.

  • Revenue Forecasts: On average, analysts predict $1.41 billion in revenue this quarter. That would represent a rise of 10.2% from the year-ago quarter.

  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $1.60 per share. Estimates range from $1.51 to $1.67.

What our community says:
CAPS All-Stars are solidly backing the stock with 99.2% awarding it an "outperform" rating. The community at large concurs with the All-Stars, with 97.4% granting it a rating of "outperform." Fools are bullish on Laboratory Corp. of America Holdings and haven't been shy with their opinions lately, logging 158 posts in the past 30 days. Laboratory Corp. of America Holdings has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Laboratory Corp. of America Holdings' income has fallen year over year by an average of 6.3% over the past five quarters. Revenue has now gone up for three straight quarters.

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

Q2

Q1

Q4

Q3

Gross Margin

41.9%

41.5%

40.9%

41.3%

Operating Margin

16.1%

17.2%

18.4%

18.4%

Net Margin

8.8%

9.3%

10.2%

11.0%

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