Waters Corporation (WAT) released first-quarter 2011 earnings per share from continuing operation of $1.01, beating the Zacks Consensus Estimate of 94 cents.
Earnings also increased by 27.8% from 79 cents in the first quarter of 2010.
Revenue
On the top line, WAT reported total revenue of $428 million for the first quarter, up 16% year over year. Foreign currency translation added 2% to sales. The company benefited from rapid acceptance by customers of new system offerings, a blooming business in Asia and increased consumer spending in pharmaceutical end markets.
Income
Operating income for the quarter amounted to $115.9 million, compared with $92.4 million in the first quarter of 2010. The company incurred total SG&A expense of approximately $117.1 million in the quarter, versus $106.7 million in the year-ago quarter.
Balance Sheet
Cash and cash equivalents and short-term investments were approximately $1.04 billion with long-term debt of $400.0 million and shareowner’s equity of $1.15 billion.
Our Analysis
In the long term, we expect Waters to benefit from its strong presence in the chromatography instrument market. A strong customer demand in mass spectrometry and HPLC will help the company to sustain healthy performance in its organic sales growth over the next few years. Furthermore, a significant portion of Waters’ revenue is derived from recurring revenue sources, including consumables and services, which are expected to continue to increase over the longer term.
However, the analytical instrument and systems market is highly competitive. Major competitors of Waters are Agilent Technologies Inc. (A), Life Technologies Corporation (LIFE) and Thermo Fisher Scientific Inc. (TMO). Waters competes in its markets primarily based on instrument performance, reliability, service and, to a lesser extent, price. Some competitors have instrument businesses that are generally more diversified, but are typically less focused on the company’s chosen markets. Some other competitors have greater financial and other resources compared to Waters.
Waters Corporation, an analytical instrument manufacturer, designs, manufactures, sells and services, through its Waters Division, high performance liquid chromatography, ultra performance liquid chromatography (LC) and mass spectrometry (MS) instrument systems and support products, including chromatography columns, other consumable products and comprehensive post-warranty service plans.
We currently maintain our Neutral rating on Waters, with a Zacks #3 Rank (short-term 'Hold' recommendation) over the next one-to-three months.
AGILENT TECH (A): Free Stock Analysis Report
LIFE TECHNOLOGS (LIFE): Free Stock Analysis Report
THERMO FISHER (TMO): Free Stock Analysis Report
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