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Category: Stock Market and Cantel Medical
Date: 26 September 2019 Stock Price: $75.78 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Cantel Medical, a company that provides infection prevention medical products and services to patients, caregivers and other healthcare providers.
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About Cantel Medical
Cantel Medical is a leading global company dedicated to delivering innovative infection prevention products and services for patients, caregivers, and other healthcare providers which improve outcomes, enhance safety and help save lives. Our products include specialized medical device reprocessing systems for endoscopy and renal dialysis, advanced water purification equipment, sterilants, disinfectants and cleaners, sterility assurance monitoring products for hospitals and dental clinics, disposable infection control products primarily for dental and GI endoscopy markets, dialysate concentrates, hollow fiber membrane filtration and separation products. Additionally, we provide technical service for our products.
Overview of Cantel Medical's latest earnings report
The numbers we are interested in (for the quarter):
- Sales: $239.476 million (up from $228.854 million from the same quarter of the previous year)
- Revenue increased by 4.64% over the last 12 months
- Cost of sales: $128.823 million (up from $121.451 million for the same quarter of the previous year)
- Cost of sales increased by 6.07% over the last 12 months
- Net income: $8.825 million (down from $16.888 million for the same quarter of the previous year)
- Diluted income per share: $0.21 (down from $0.41 for the same quarter of the previous year)
- Dividend declared: $0.10 (up from $0.09 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 41.823 million (up from 41.667 million for the same quarter of the previous year)
- Cash and cash equivalents: $44.535 million
- Cash and cash equivalents per share: $1.06
- Cash and cash equivalents makes up 1.39% of Cantel Medical's market capital
- Cash and cash equivalents makes up 4.16% of Cantel Medical's total assets
- Accounts receivable: $146.910 million
- Accounts receivable makes up 13.72% of Cantel Medical's total assets
- Inventories: $138.234 million
- Inventories makes up 12.91% of Cantel Medical's total assets
- Stockholders equity of Cantel Medical: $661.537 million
- Stockholders equity per share: $15.81
- Cantel Medical's is trading at 4.79 times its stockholders equity which is within the expected range of between 2 and 4 which most companies tend to trade at.
Cantel Medical's management commentary on the results and earnings guidance
George Fotiades, President and Chief Executive Officer, stated, "We are pleased to report strong sales growth in both our Medical and Dental segments. Medical sales increased 9.8% organically, with total sales growth of 8.2%. Organic growth returned in Dental with an increase of 0.8%, compared to a record fourth quarter in the prior fiscal year. Dental sales grew 17.2% in total, driven by the acquisition of Omnia S.p.A. which closed in the previous quarter. Life Sciences decreased 11.8% due to continued softness in our Hemodialysis Water business, and the sale of our High Purity Water business in Canada earlier in the year. Internationally, sales increased 12.9%, with 9.9% organic growth."
In the fourth quarter, the Company announced the acquisition of Hu-Friedy, a premier global dental instrumentation and instrument management system manufacturer. This acquisition meaningfully accelerates Cantel's strategy to be a leading global provider of innovative infection prevention and reprocessing workflow solutions. We expect this transaction to close in the first quarter of our fiscal year 2020.
The image below shows the fiscal guidance of Cantel's 2020 fiscal year.
In the fourth quarter, the Company announced the acquisition of Hu-Friedy, a premier global dental instrumentation and instrument management system manufacturer. This acquisition meaningfully accelerates Cantel's strategy to be a leading global provider of innovative infection prevention and reprocessing workflow solutions. We expect this transaction to close in the first quarter of our fiscal year 2020.
The image below shows the fiscal guidance of Cantel's 2020 fiscal year.
Cantel Medical (NYSE: CMD) stock price history
The image below shows the stock price history of Cantel Medical (NYSE: CMD) over the last 5 years. And it's been a very good time for Cantel Medical (CMD). 5 years ago Cantel Medical was trading around $35.20 a stock, and its currently it's trading at $75.78. That's a return of 1115.3% over the 5 year period. Cantel Medical is trading at a lot closer to its 52 week low than it is to its 52 week high which to us is a clear sign that the short term sentiment and momentum of the stock is largely negative.
Recent coverage of Cantel Medical (NYSE:CMD)
The extract below shows recent coverage of Cantel Medical as obtained from Zacks
Investors might want to bet on Cantel Medical (CMD - Free Report) , as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices. A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years. Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements. Therefore, the Zacks rating upgrade for Cantel basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock Prices
The change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock. Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Cantel imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.
Read the original article here
Investors might want to bet on Cantel Medical (CMD - Free Report) , as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices. A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years. Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements. Therefore, the Zacks rating upgrade for Cantel basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock Prices
The change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock. Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Cantel imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.
Read the original article here
Cantel Medical (NYSE: CMD) latest stock valuation
So based on the earnings report of and fiscal guidance of Cantel Medical (NYSE:CMD) what do we value Cantel (CMD) stock at? Based on their latest earnings report our target (full value) price for Cantel Medical is $62.50 a stock. We therefore believe the stock of Cantel is overvalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $62.50 Therefore we believe the a good entry point into the stock is below $56.20. We believe the stock of Cantel Medical (CMD) will pull back from its currents levels as we cannot see how the stock can trade at its current price for long considering the earnings reported and the fiscal guidance provided. In our valuation of Cantel Medical we were very generous with the future earnings potential of the group over the next two years and we still couldn't get a valuation that's even close to the current stock price of Cantel.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $62.50 Therefore we believe the a good entry point into the stock is below $56.20. We believe the stock of Cantel Medical (CMD) will pull back from its currents levels as we cannot see how the stock can trade at its current price for long considering the earnings reported and the fiscal guidance provided. In our valuation of Cantel Medical we were very generous with the future earnings potential of the group over the next two years and we still couldn't get a valuation that's even close to the current stock price of Cantel.