What: Contract research organization ICON PLC (ICLR 0.03%) soared mored than 16% today after the company reported second quarter earnings today.
So What: ICON delivered mixed results today, as net revenue during the quarter of $389 million, which was well below the analyst expectations of $402 million for the quarter. However, the company managed to expand margins, which allowed them to produce earnings-per-share of $0.95, which was well ahead of the $0.89 in that analyst were expecting and represented a strong 44% growth over last years results.
Management expects the new margins to be sustainable as well, and as a result raised 2015 earnings guidance by 8%, and now expect them to fall in the range of $3.90 to $4.00 per share. In addition, the company's board approved a further $400 million share repurchase program,
Now What: I think investors were right to cheer this report, as sustainable margins improvements should allow the company to produce strong earnings growth for the year. The new range that management guided for is well above the $3.67 that analysts were expecting.
In addition, even after today's pop shares appear to be trading right around 19 times 2015 earnings estimates, so the $400 million addition to the share repurchase program should create value for shareholders, and represents almost 9% of the company's current $4.5 billion market cap.
ICON has been a huge long-term winner for investors, and with analyst expecting long term earnings growth of more than 13%, I see no reason to believe that ICON stock can't continue to treat investors well.
