Perrigo Company (PRGO) recently hit a new multi-year high at $64.66 after reporting a solid Q3 earnings surprise of 21% in late April. Estimates are on the upswing and shares are trading in line with their industry peers.
Company Description
Perrigo Company, through its subsidiaries, develops, manufactures and sells over-the-counter, prescription pharmaceuticals, nutrition products and medical diagnostic products worldwide. The company was founded in 1887 and has a market cap of $5.23 billion.
Even though shares of PRGO traded lower in 2008 and 2009 in the weak market, the company’s business barely blinked an eye, showing strong annual sales growth in a very challenging environment. That momentum has carried over to the recovery, on display with much better than expected Q3 results from April 29.
Third-Quarter Results
Revenue for the period was up 6% from last year to $538 million. Earnings also looked good, coming in at 76 cents, 21% ahead of the Zacks Consensus Estimate. Perrigo has been blowing past expectations for the last year with an average earnings surprise of 18%.
The strong showing was led by the company’s Rx Pharmaceuticals segment, where sales were up 22% to $51 million on an increase in service and new product revenue. Perrigo’s largest segment, Consumer Healthcare was up 4% to $436 million on $18 million in new product sales and $11 million from higher volumes of existing products.
Solid Balance Sheet
Perrigo also emerged from the quarter with a stronger balance sheet, with cash and equivalents up $12 million from last quarter to $315 million. Its total debt load of $825 million is down $18 million from Q2.
Estimates Jump
With the company painting an optimistic view, analysts went ahead and raised estimates. The current year is up 18 cents to $2.78 while the next-year estimate is up 24 cents in the same time to $3.25, a solid 17% growth projection.
In spite of the recent gains and optimistic outlook, shares of PRGO trade in line with its industry with a forward P/E of 21X. Its P/B multiple of 5.07X is a premium to the industry average of 2.40X.
The Chart
Shares of PRGO have been ripping higher for most of the last 14 months after bottoming out around $20 with the market in March of 2009. More recently, shares hit a new all-time high at $64.66 on the good quarter. Look for support from the trend line and the previous breakout area at $53 on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service. Zacks Investment Research
