Solutia Beats on EPS But GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

Solutia (NYS: SOA) reported earnings on April 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Solutia missed estimates on revenue but beat expectations on earnings per share.

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


Margins dropped across the board.

Revenue details
Solutia reported revenue of $498 million. The four analysts polled by S&P Capital IQ expected to see revenue of $539.6 million on the same basis. GAAP reported sales were 2.2% lower than the prior-year quarter's $509 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 $0.55. The five earnings estimates compiled by S&P Capital IQ anticipated $0.52 per share. GAAP EPS of $0.43 for Q1 were 20% lower than the prior-year quarter's $0.54 per share.

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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 31.7%, 10 basis points worse than the prior-year quarter. Operating margin was 15.3%, 430 basis points worse than the prior-year quarter. Net margin was 10.6%, 220 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $571.5 million. On the bottom line, the average EPS estimate is $0.58.

Next year's average estimate for revenue is $2.21 billion. The average EPS estimate is $2.19.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 91 members rating the stock outperform and 12 members rating it underperform. Among 33 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 31 give Solutia a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Solutia is hold, with an average price target of $27.04.

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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