Sara Lee Beats on EPS but GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

Sara Lee (NYS: SLE) reported earnings today. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q2), Sara Lee met expectations on revenues and beat expectations on earnings per share.

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

Margins contracted across the board.

Revenue details
Sara Lee logged revenue of $2.08 billion. The nine analysts polled by S&P Capital IQ expected revenue of $2.11 billion. Sales were 11% lower than the prior-year quarter's $2.35 billion.

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

EPS details
Non-GAAP EPS came in at $0.27. The 13 earnings estimates compiled by S&P Capital IQ predicted $0.25 per share on the same basis. GAAP EPS of $0.78 for Q2 were 40% lower than the prior-year quarter's $1.29 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 33.4%, 50 basis points worse than the prior-year quarter. Operating margin was 9.6%, 100 basis points worse than the prior-year quarter. Net margin was 22.5%, 1,290 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.95 billion. On the bottom line, the average EPS estimate is $0.25.

Next year's average estimate for revenue is $8.12 billion. The average EPS estimate is $0.92.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Sara Lee is outperform, with an average price target of $19.50.

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At the time thisarticle 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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