DJ Orthopedics beats estimate by 50%. Market is silent.
BY EDITOR, AUGUST 11, 2003
DJ Ortho reported a sharp increase in net earnings to $2.7 million ($0.15 per share) on just a 4% rise in sales to $47 million for the June quarter. Operating margins improved significantly in the quarter reaching 15% of sales. Management's restructuring of manufacturing and transfer of operations to its efficient new plant in Tijuana and successful account rationalization in the ProCare segment were the prime contributors to DJ Ortho's surprisingly strong quarter. We would add that we toured the Tiajuana manufacturing facility last week and were impressed with the operations team, the efficiency of the manufacturing process and the cleanliness of the plant.
What's in store for the rest of the year? Management has decided for now that the best policy is silence. Given Wall Street's penchant for over-reaction this probably is not an unwise approach on management's part. Anyway, for the last quarter, DJO's EPS came in at 50% above analyst expectations – expectations, by the way, that had been significantly raised in the past quarter. Where do the numbers go now? We'll be conservative and say potentially higher. Ironically, DJO's stock didn't do a thing. Apparently a 4% revenue growth rate was singularly unexciting to both analysts and institutional investors. Their loss. Operationally, DJO is rocking.
