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The Gory Details of Quest Diagnostics's Earnings Miss

Wednesday - 4/17/2013, 2:00am  ET

Quest Diagnostics reported earnings on April 17. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Quest Diagnostics missed estimates on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share dropped significantly. GAAP earnings per share dropped.

Margins contracted across the board.

Revenue details
Quest Diagnostics booked revenue of $1.79 billion. The 17 analysts polled by S&P Capital IQ predicted a top line of $1.86 billion on the same basis. GAAP reported sales were 7.7% lower than the prior-year quarter's $1.94 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.89. The 21 earnings estimates compiled by S&P Capital IQ predicted $1.04 per share. Non-GAAP EPS of $0.89 for Q1 were 17% lower than the prior-year quarter's $1.07 per share. GAAP EPS of $0.85 for Q1 were 14% lower than the prior-year quarter's $0.99 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 38.9%, 360 basis points worse than the prior-year quarter. Operating margin was 12.7%, 380 basis points worse than the prior-year quarter. Net margin was 7.6%, 60 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.86 billion. On the bottom line, the average EPS estimate is $1.11.

Next year's average estimate for revenue is $7.36 billion. The average EPS estimate is $4.39.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 559 members out of 594 rating the stock outperform, and 35 members rating it underperform. Among 193 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 182 give Quest Diagnostics a green thumbs-up, and 11 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Quest Diagnostics is hold, with an average price target of $59.97.

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This article was originally published as The Gory Details of Quest Diagnostics's Earnings Misson Fool.com

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