Why Is Conmed (CNMD) Down 0.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Conmed (CNMD). Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Conmed due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

CONMED Q1 Earnings and Revenues Surpass Estimates

CONMED Corporation reported first-quarter 2020 adjusted earnings per share of 51 cents, which beat the Zacks Consensus Estimate of 44 cents by 15.9%. However, the bottom line declined 10.5% from the year-ago quarter.

The New York-based medical products manufacturer reported revenues of $214 million, down 2% on a year-over-year basis and 0.7% at constant currency (cc). Nonetheless, the top line surpassed the Zacks Consensus Estimate by 2.6%.

Segment Details

Orthopedic Surgery

Revenues in the segment totaled $99.3 million, down 12.4% from the year-ago quarter.

On a domestic and on international basis Orthopedics revenues fell 18.2% and 8.7%, respectively, from the prior-year levels.

General Surgery

Revenues in the segment amounted to $114.7 million, up 9.2% year over year.

Domestically, General Surgery sales improved 14% year over year but international sales declined 0.8%.

Sales by Geography

In the reported quarter, sales in the United States amounted to $118.8 million, up 1.5% year over year. International sales declined 6.1% to $95.2 million.

Margins

Gross profit in the quarter totaled $119.1 million, down 1.9% year over year. Per management, adjusted gross margin was 55.7%, contracting 10 bps.

Operating income came in at $13.2 million, up 13.2% year over year. Operating margin was 6.2%, up 90 bps year over year.

Financial Condition

Cash flow from operations for the three months ended Mar 31, 2020, was 3.7 million compared with ($3.9) million at the year-end 2019.

As of Mar 31, 2020, long-term debt at the end of the year was $772.6 million, up 2.3% sequentially.

2020 Guidance

Due to the uncertainty surrounding the extent and magnitude of the COVID-19 pandemic, management has decided to withdraw its previously announced 2020 guidance. It further added that it cannot furnish a reliable outlook at this moment.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -477.78% due to these changes.

VGM Scores

At this time, Conmed has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Conmed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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