Momentum Play: Perrigo Co. (PRGO)

Perrigo Company (PRGO) recently hit a new all-time high at $67.49 after posting an average earnings surprise of 16% over the last four quarters. With a strong industry rank and rising estimates, this Zacks #1 rank stock looks like a solid momentum pick.

Company Description

Perrigo Company develops and manufactures OTC and prescription drugs, nutritional products and medical devices worldwide. The company was founded in 1887 and has a market cap of $7 billion.

Our last look at Perrigo’s business came on August 12 when the company reported solid Q4 results that easily beat expectations.

Fourth-Quarter Results

Revenue for the period was up 22% from last year to $619 million. Earnings also came in strong at 71 cents, 4.4% ahead of the Zacks Consensus Estimate, where the company now has an average earning surprise of 16% over the last four quarters.

The solid quarter was driven by the company’s consumer healthcare segment, where sales were up 18% from last year to $481 million on a solid mix of acquired, new and existing products. The segment also saw some nice gains in gross margin, up 270 bps on the same conditions.

The company’s Rx Pharmaceuticals segment however showed the biggest revenue increase from last year, up 72% to $84 million on higher new product and ORx (over-the counter-prescription) volumes.

Awesome Balance Sheet

Although Perrigo’s total debt did increase from last year on some of its acquisitions, its cash and equivalents jumping $182 million to $498 million. The company’s debt-to-equity ratio of 25.5% is well below the industry average of 86%.

Estimates Rising

With the company posting solid results and boosting its guidance, analysts have followed suit. The current-year estimate is up 12 cents in the last 60 days to $3.42 while the next-year estimate has added 26 cents to $3.83, a solid 12% growth projection.

Nice Valuation

The valuation picture looks solid too, with a forward P/E of 19X against the industry average of 21X.

2-Year Chart

PRGO recently jumped higher with the market, hitting a new all-time high at $67.49 after spending most of the last 18 months trending higher. The stochastic below the chart is signaling that shares are trading safely away from over-bought territory. Look for support from the trend line and short-term low on any weakness, take a look below.

PERRIGO COMPANY (PRGO): Free Stock Analysis Report

About Michael Vodicka 49 Articles

Affiliation: Zacks Investment Research

Visit: Zacks Investment Research

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