Amgen Corporation (AMGN) recently raised its full year guidance as third quarter sales rose. This Zacks #1 Rank (strong buy) trades with a forward P/E of just 11, well under its peers which average 16x.
Amgen is a biotechnology company focusing on cancer, kidney disease, rheumatoid arthritis and bone diseases.
Amgen Surprised for the 7th Time
On Oct 24, Amgen reported its third quarter results and surprised on the Zacks consensus by 12 cents. Earnings per share were $1.38 compared to the consensus of $1.26. It was the 7th consecutive earnings surprise.
Revenue rose 3% to $3.9 billion from $3.8 billion in the third quarter of the prior year. International sales climbed 9% to $912 million while U.S. sales rose 2% to $2.9 billion.
The company announced it was increasing its stock repurchase program to a total of $10 billion based on its confidence in the company’s value.
Raised Full Year Guidance
With yet another earnings beat on the books and confidence in the future, Amgen raised its EPS guidance to a range of $5.15 to $5.30.
Given the earnings guidance revision, the analysts have been adjusting their estimates higher over the last 90 days. 2011 Zacks Consensus Estimate has risen to $5.28 from $5.09 in that time.
That is earnings growth of just 3%, however.
For 2012, the Zacks Consensus has jumped to $5.60 from $5.41 in the last 3 months. That is earnings growth of 6%.
Stuck in a Range
Amgen’s shares have been stuck in a trading range over the past 3 years.
Still, the stock has value characteristics.
In addition to a P/E under 15, which is my cut-off for value, it also has a price-to-book ratio of 2.3. A P/B under 3.0 usually indicates value.
The company also has a solid 1-year return on equity of 19.8%.
Along with the share buyback, it also rewards shareholders with a dividend yielding 1.9%. This is much better than the industry which, on average, doesn’t pay out anything to shareholders.
Amgen is a value stock with a consistent track record of surprising on the estimate.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.
