Alcon, Inc. - Growth & Income

Alcon, Inc. (ACL) recently reported its 9th consecutive positive earnings surprise driven by strong growth in the emerging market. Estimates have been moving higher following the latest earnings beat, sending the stock to a Zacks #2 Rank (Buy).

Alcon is also fundamentally solid, carrying over $3 billion in cash and equivalents and no long-term debt. The stock currently yields 1.3%.

Company Description

Alcon, Inc. is a leading eye care company. The company researches, develops, manufactures and markets pharmaceuticals, surgical equipment and devices, contacts lens solutions and other vision care products.

Alcon is headquartered in Hunenberg, Switzerland and operates in 75 countries around the world. It has a market cap of $50.0 billion.

Fourth Quarter Results

Alcon recently reported fourth quarter earnings per share of $1.74, beating the Zacks Consensus Estimate by 4 cents. It was a 9% increase over the same quarter last year.

Sales were up 3.4% year-over-year driven by a 9.1% increase in pharmaceutical products. International organic sales were up a solid 7.7% including 13.1% in emerging markets.

The gross profit margin expanded from 74.0% of sales to 76.0%. Meanwhile, adjusted operating income was up 9.3%.

Outlook

Estimates for 2011 inched higher following the solid quarter. The Zacks Consensus Estimate is $8.48, corresponding to 10% growth over 2009 EPS.

The 2012 Zacks Consensus Estimate is $9.41, equating to 11% EPS growth. It is a Zacks #2 Rank (Buy) stock.

Fundamentals

Alcon has a very strong balance sheet, carrying $3.4 billion in cash and equivalents and no long-term debt. The company produces strong cash flows and pays an annual dividend that currently yields 1.3%.

Its return on equity is almost twice that of the industry average at 36.6%. Shares trade at a premium to the peer group at 19.5x forward earnings, but its PEG ratio is a reasonable 1.4.

Shares are up about 5% since December 1, but are still a bit off their 52-week high:

ACL: Alcon, Inc.