Amgen's Third Quarter Earnings Report

By Investopedia Staff | October 23, 2012 AAA

Amgen (Nasdaq:AMGN) announced its results for the third quarter on October 23, 2012. Amgen is a biotechnology medicines company that discovers, develops, manufactures, and markets medicines for grave illnesses.

Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: Surprising Earnings Results

The Numbers: Amgen's latest numbers were good, as the company announced EPS and revenues that came in ahead predictions. The company reported adjusted net income of $1.67 per share versus the $1.43 per share estimate and revenues of $4.32 billion versus the $4.08 billion estimate. Revenue climbed 9.5% from the same period last year. Amgen's revenue has grown during each of the past four quarters on a year-over-year basis. Net income for the third quarter was $1.11 billion. According to the reported number, this is up 143.8% from last year's figures. Last quarter marked the third in a row of rising net income.

A Look Back: Gross margin shrank one percentage point to 83.7%. The contraction appeared to be driven by increased costs, which rose 16.5% from the year earlier quarter while revenue rose 9.5%.

Net income has increased 17.1% year-over-year on average across the last five quarters. The biggest gain came in the most recent quarter, when income climbed more than twofold from the year-earlier quarter.

Looking Ahead: The outlook for the company's results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is $1.39 per share, down from $1.47 90 days ago. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. The average estimate for the fiscal year is $6.22 per share, a rise from $6.08 90 days ago.

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