China Kanghui Holdings Misses Where it Counts

Seth Jayson, The Motley Fool
Updated

China Kanghui Holdings (NYS: KH) reported earnings on May 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), China Kanghui Holdings beat expectations on revenues and missed estimates on earnings per share.

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


Gross margins shrank, operating margins dropped, net margins grew.

Revenue details
China Kanghui Holdings reported revenue of $13.1 million. The four analysts polled by S&P Capital IQ wanted to see sales of $12.7 million on the same basis. GAAP reported sales were 26% higher than the prior-year quarter's $10.4 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 $0.18. The four earnings estimates compiled by S&P Capital IQ predicted $0.19 per share. GAAP EPS of $0.18 for Q1 were 29% higher than the prior-year quarter's $0.14 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 70.8%, 90 basis points worse than the prior-year quarter. Operating margin was 38.1%, 570 basis points worse than the prior-year quarter. Net margin was 35.9%, 360 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $15.5 million. On the bottom line, the average EPS estimate is $0.22.

Next year's average estimate for revenue is $62.9 million. The average EPS estimate is $0.91.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 23 members out of 34 rating the stock outperform, and 11 members rating it underperform. Among 11 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), six give China Kanghui Holdings a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on China Kanghui Holdings is outperform, with an average price target of $23.64.

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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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