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3 Companies That Crushed Earnings Estimates This Quarter

The stellar second-quarter earnings reported by major large-cap companies have alleviated concerns regarding an economic slowdown and inflation. Many companies reported rising sales and record profit margins despite increasing costs. So, we think shares of Illumina (ILMN), Regeneron (REGN), and Innospec (IOSP), which surpassed consensus EPS estimates in the last reported quarter, could be worth watching. Let's discuss.

The second quarter of 2021 witnessed a significant jump in corporate earnings, offsetting concerns related to production and supply bottlenecks and decelerating economic growth. According to a survey conducted by the National Association of Business Economics (NABE), 66% of companies reported an increase in sales in the second quarter. In comparison, a mere 3% of companies reported lower sales on a sequential basis.

Furthermore, companies have been reporting record profit margins in the second quarter despite the impact of inflation. S&P 500 companies’ overall earnings for the second quarter are expected to grow 76% year-over-year, representing their best growth since 2009.

Corporate earnings reports for the second quarter have been great so far and are expected to remain favorable for investors. So, we think Illumina, Inc (ILMN), Regeneron Pharmaceuticals, Inc. (REGN), and Innospec Inc. (IOSP) could be worth adding to one’s watchlist because they surpassed earnings estimates this quarter and are expected to deliver strong performance in the coming quarters.

Illumina, Inc (ILMN)

ILMN is a leading biotech company that operates in two segments—Core Illumina and consolidated variable interest entities. It provides sequencing and array-based solutions for genetic and genomic analysis internationally. The company is a major player in the consumer genomics and molecular diagnostics field.

On May 31, 2021, ILMN, Next Generation Genomic Co. Ltd, and the Association of Southeast Asian Nations (ASEAN) jointly launched VeriSeq™ NIPT Solution v2 in Thailand, a CE-IVD that is a next-generation sequencing-based approach to non-invasive prenatal testing (NIPT). This breakthrough technology should allow ILMN to emerge as a prominent player in the genomics industry.

ILMN’s revenue increased 77.9% year-over-year to $1.13 billion in its  fiscal second quarter ended July 4. Its gross profit stood at $802 million, up 87.4% from the same period last year. Its net income grew 293.6% from the year-ago value to $185 million. The company’s non-GAAP EPS increased 201.6% year-over-year to $1.87, beating the Street’s $1.35 estimate.

A $1.04 billion consensus revenue estimate for its fiscal third quarter (ending September 2021) indicates a 31.5% increase year-over-year. The Street expects the company’s EPS to rise 32.3% from the prior-year quarter to $1.35 in the current quarter. ILMN has an impressive earnings surprise history as well; it beat the consensus EPS estimates in three  of the trailing four quarters. Shares of ILMN have gained 24.5% over the past year and 34.4% year-to-date.

ILMN has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

ILMN has an A  grade  for Quality, and a grade of B for Sentiment. Among the 505 stocks in the Biotech industry, ILMN is ranked #11.

Click here to view additional ILMN ratings for Growth, Momentum, Value, and Stability.

Note that ILMN is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.

Click here to checkout our Healthcare Sector Report for 2021

Regeneron Pharmaceuticals, Inc. (REGN)

Regeneron Pharmaceuticals develops and manufactures drugs for treating serious ailments. REGN offers a wide range of medical products, which include EYLEA (aflibercept) an injection, Praluent (alirocumab) an injection, ARCALYST (rilonacept) an injection for Subcutaneous use, Kevzara (sarilumab) a solution for subcutaneous injection, and ZALTRAP (Ziv-aflibercept) an injection for intravenous infusion.

On August 5, REGN announced the results of its  phase 3 trial of Libtayo®, which demonstrated improved overall survival as a monotherapy or in combination with chemotherapy in first-line advanced non-small cell lung cancer. If approved, this drug should allow REGN to grow significantly in the near term.

On August 4, REGN announced that the New England Journal of Medicine (NEJM) published positive Phase 3 trial results for REGEN-COV™ (casirivimab and imdevimab) to prevent COVID-19 infection. This is expected to be widely demanded, given the resurgence of the COVID-19 cases.

REGN’s total revenues increased 163.2% year-over-year to $5.14 billion in its  fiscal second quarter, ended June 30. Its income from operations grew 409.9% from its year-ago value to $3.35 billion, while its net income improved 245.4% year-over-year to $3.10 billion over the period. Its EPS increased 267.5% year-over-year to $27.97, outperforming the $17.69 consensus estimate.

The $2.69 billion consensus revenue estimate for its  fiscal third quarter, ending September 2021 indicates a 17.3% improvement from the same period last year. In addition, analysts expect the company’s EPS to come in at $9.01 in the current quarter, indicating a 7.8% rise year-over-year. Moreover, REGN surpassed the Street’s EPS estimates in each of the trailing four quarters.

REGN has gained 26.4% year-to-date. In addition, the stock has gained 22.4% over the past six months to close yesterday’s trading session at $613.94.

The company has an overall B rating, which translates to Buy in our proprietary rating system. In addition, REGN has a B grade for Growth, Value, Quality, and Sentiment. It is ranked #9 in the Biotech industry.

Beyond what we’ve stated above, we have also rated REGN for Momentum and Stability. Click here to view all REGN ratings.

Note that REGN one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.

Click here to checkout our Healthcare Sector Report for 2021

Innospec Inc. (IOSP)

Innospec Inc. develops, manufactures, blends, markets, and supplies specialty chemicals in the United States, the rest of North America, the United Kingdom, the rest of Europe, and internationally. The company operates through three segments: Fuel Specialties; Performance Chemicals; and Oilfield Services.

On July 6, IOSP announced further investment in new production capacity for natural, sulfate-free performance chemicals to meet an accelerating demand for mild and sustainability-focused products.

On May 12, IOSP began construction of a performance chemicals technology center to accelerate innovation and product development. The move represents the company’s continued investment in new products and technologies to drive innovation  and to enable its customers to meet their long-term sustainability objectives.

IOSP’s net sales increased 44.8% year-over-year to $354.50 million in the fiscal second quarter, ended June 30. Its gross profit grew 83.2% from its  year-ago value to $108.30 million. IOSP’s net income came in at $22.40 million, indicating a 156.4% rise year-over-year. In addition, the company’s EPS increased 155.6% year-over-year to $0.90, beating its consensus estimate for the quarter.

The Street expects IOSP’s revenues to rise 31.3% year-over-year to $348.15 million in the current quarter, ending September 2021. The $0.99 consensus EPS estimate for the current quarter indicates a 40.1% improvement year-over-year. Also, IOSP surpassed the Street’s EPS estimates in three of the trailing four quarters.

Shares of IOSP have gained 16.2% over the past year. The stock gained 2.1% intraday to close yesterday’s trading session at $91.21.

It’s no surprise that IOSP has an overall B rating, which equates to Buy in our POWR Ratings system. In addition, IOSP has a B grade for Growth and Value. It is ranked #15 out of the 98 stocks in the A-rated Chemicals industry.

To see additional POWR Ratings for Sentiment, Stability, Momentum, and Quality, click here.

ILMN shares were unchanged in after-hours trading Tuesday. Year-to-date, ILMN has gained 36.86%, versus a 19.18% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.


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