Earnings from Cerner and Church & Dwight Crossing Wall Street

Earnings from Cerner and Church & Dwight

We had two more earnings reports this morning. For Q2, Cerner (CERN) said it made 80 cents per share. That was four cents more than Wall Street’s (and the company’s own) estimate. Q2 revenue rose 10% to $1.457 billion. Cerner’s adjusted operating margin increased to 20.6% and free cash flow rose 153% to $162 million.

“I am very pleased with Cerner’s top and bottom-line execution in the second quarter, with our results reflecting good progress on our transformation initiatives and a strengthening market presence,” said Brent Shafer, Chairman and CEO. “We delivered good revenue growth, expanded Adjusted Operating Margin and increased Adjusted Diluted EPS (non-GAAP) during the quarter while continuing to accelerate innovation and drive client value.”

“During the second quarter we took a series of actions which we believe will strengthen our business in the years ahead. Namely, as part of recently implemented productivity measures and a comprehensive review of our business, we performed a sizable reduction in force, took specific measures to shrink our physical (office space) footprint and made some important product rationalization decisions to improve the return on our nearly $800 million annual R&D investment,” said Mark Erceg, Executive Vice President and Chief Financial Officer. “We also spent $400 million on share repurchases, which brings our year-to-date purchases to $750 million, because we continue to believe that Cerner stock, at current trading levels, represents a good return on investment for our shareholders.”

Now let’s look at guidance. For Q3, Cerner expects revenue growth of 6%. For all of 2021, Cerner sees revenue growth “in the mid-single digits.” For earnings, Cerner expects Q3 growth of 12% to 15%. For last year’s Q3, Cerner made 72 cents per share, so the guidance translates to Q3 earnings of roughly 81 to 83 cents per share. Wall Street had been expecting 82 cents per share.

The best news is that Cerner increased its full-year earnings guidance. Before, they had expected earnings of at least $3.20 per share. Now they see earnings of at least $3.25 per share.

Our other earnings report came from Church & Dwight (CHD). For Q2, the consumer products company said it made 76 cents per share. That beat Wall Street’s estimate of 70 cents per share. For their part, C&D was expecting 69 cents per share. Net sales grew 6.4% to $1,271.1 million

Matthew Farrell, Chief Executive Officer, commented, “Our brands once again drove strong consumption in Q2. Organic sales growth of 4.5% is on top of 8.4% organic growth in Q2 2020. In the U.S., we grew consumption in 13 of the 16 categories in which we compete. Our brands experienced double-digit consumption growth in 9 of those 16 categories, including gummy vitamins, cat litter, dry shampoo, and water flossers. Our personal care categories are benefitting from increased consumer mobility. Consumption is far outpacing shipments as supply chain disruptions continue and fill levels are below normal. Our International business, despite many countries still experiencing lockdowns, delivered broad-based organic sales growth of 10.4%. Global online sales grew 7.2% (on top of 77% growth in Q2 2020) and as a percentage of total sales has expanded to 14.2% in Q2.”

For Q3, Church & Dwight expects earnings of 70 cents per share on sales growth of 3%. Wall Street had been expecting 83 cents per share. The company said that it is “temporarily constrained by supply.”

For all of 2021, C&D now expects earnings to be at the “lower end” of its EPS growth range of 6% to 8%. That works out to about $2.99 to $3.05 per share. Wall Street had been expecting $3.03 per share.

Posted by Eddy Elfenbein on July 30th, 2021 at 7:39 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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