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Baxter Exhibits Strong 1Q16 Performance, Beat Estimates

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Nov. 20 2020, Updated 12:49 p.m. ET

1Q16 takeaways

On April 26, 2016, Baxter International (BAX) released its 1Q16 earnings. After the announcement, Baxter’s share price rose ~1% from $43.63 on April 25, 2016, due to the better-than-expected 1Q16 results reported by the company. Baxter also raised its fiscal 2016 earnings guidance.

In 1Q16, Baxter International earned revenues of ~$2.38 billion, registering a decline of 1% on a YoY (year-over-year) basis. It beat revenue estimates of $2.35 billion as well as the company guidance of approximately 2% revenue decline.

The company registered diluted EPS (earnings per share) of $0.36, exceeding the earnings consensus estimate of $0.29. EPS results also exceeded the company guidance of $0.28–$0.30.

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Segmental performance

The decline in revenues included the negative impact of around 5% attributable to foreign exchange. Thus, the company’s constant currency revenue growth was approximately 4% on a YoY basis. The operational growth came in at the high end of the company guidance of around 3%–4%. Both the Hospital and Renal Products business segments reported growth in sales amounting to approximately 4% and 5%, respectively, on an operational basis.

The revenue growth was primarily driven by the strength in the US Fluid Systems, Peritoneal Dialysis, and the Acute Renal Therapy businesses. For a detailed discussion on Baxter’s fundamentals, and its valuation and growth drivers, please read Getting to Know the New Baxter: Key Growth Drivers for 2016.

Baxter International’s peers Becton Dickinson (BDX), St. Jude Medical (STJ), and CR Bard (BCR) reported revenues of about $3 billion, $1.5 billion, and $3.5 billion, respectively, for 1Q16. Investors interested in Baxter International can invest in the PowerShares S&P 500 Low Volatility Portfolio ETF (SPLV) to gain diversified exposure to the company. BAX accounts for ~1.0% of SPLV’s total holdings.

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