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Embecta Corporation (EMBC)
NASDAQ:EMBC
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Embecta Corporation
(NASDAQ:EMBC)
49Neutral
Positive Factors
Cost Savings
The organizational restructuring plan, along with the discontinuation of the patch pump program, is expected to generate annualized pre-tax cost savings of $60-$65M.
Earnings
Embecta reported an impressive F4Q24 quarter, beating expectations on adjusted revenue, margins and EPS, while setting FY2025 preliminary adj. EBITDA and adj. EPS guidance well ahead of expectations.
Negative Factors
Revenue Guidance
Revenue guidance for 2025 is set below current market expectations, indicating a potential decline in financial performance.
Embecta Corporation (EMBC) vs. S&P 500 (SPY)
Market Cap
$832.49M
Dividend Yield4.3%
Average Volume (3M)586.54K
Price to Earnings (P/E)13.9
Beta (1Y)0.93
Revenue Growth-1.31%
EPS Growth4.59%
CountryUS
Employees2,100
SectorHealthcare
Sector Strength78
IndustryMedical Equipment & Supplies
Share Statistics
EPS (TTM)1.00
Shares Outstanding58,134,434
10 Day Avg. Volume754,630
30 Day Avg. Volume586,536
Financial Highlights & Ratios
PEG Ratio3.02
Price to Book (P/B)N/A
Price to Sales (P/S)0.75
Price to Cash Flow (P/CF)-39.30
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$26.00Price Target Upside86.25% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Embecta Corporation Business Overview & Revenue Model
Company DescriptionEmbecta Corporation (EMBC) is a medical technology company specializing in diabetes care solutions. The company is dedicated to improving the lives of people with diabetes by providing innovative products and services. Embecta's core offerings include a wide range of insulin delivery devices such as pen needles, syringes, and other related products that support diabetes management across global markets.
How the Company Makes MoneyEmbecta Corporation makes money primarily through the sale of its diabetes care products. The company's revenue model is centered around manufacturing and distributing insulin delivery devices, which are essential for diabetes management. Sales are generated through various channels, including direct sales to healthcare providers, pharmacies, and retail outlets, as well as through partnerships with healthcare organizations. Additionally, Embecta may engage in strategic collaborations and partnerships that enhance its product offerings and expand its market reach, contributing to its revenue streams.
Embecta Corporation Financial Statement Overview
Summary
Embecta Corporation faces challenges across its financial statements. The income statement reflects shrinking margins and declining revenue growth. The balance sheet is concerning with negative equity and high leverage, while the cash flow statement highlights issues in cash generation and management. The company may need strategic adjustments to improve financial health and stability.Income Statement
The income statement shows a declining trend in revenue from the previous annual period to the TTM, indicating some challenges in revenue generation. Gross profit margin for TTM is approximately 63.68%, which is healthy, but net profit margin has decreased to around 5.19% due to a significant drop in net income. The company has experienced shrinking EBIT and EBITDA margins, suggesting declining operating efficiency.55
Neutral
Balance Sheet
The balance sheet reveals potential risks with negative stockholders' equity, indicating high leverage and financial instability. The debt-to-equity ratio is not applicable due to negative equity, but the high level of total debt poses a risk. The equity ratio is negative, highlighting that liabilities exceed assets, which could be concerning for creditors and investors.40
Negative
Cash Flow
Cash flow metrics indicate a reduction in operating cash flow from previous periods. The free cash flow growth rate is negative, showing a decline in cash available after capital expenditures. The operating cash flow to net income ratio is low at 0.76, suggesting inefficiencies in converting income into cash. Overall, cash flow stability seems to be compromised.30
Negative
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.16B | 1.12B | 1.12B | 1.13B | 1.17B | 1.09B | Gross Profit |
| 807.80M | 735.20M | 749.90M | 774.90M | 800.00M | 762.60M | EBIT |
| 429.80M | 166.80M | 221.50M | 309.60M | 492.00M | 486.50M | EBITDA |
| 462.30M | 199.00M | 245.40M | 400.20M | 530.00M | 524.00M | Net Income Common Stockholders |
| 337.90M | 78.30M | 70.40M | 223.60M | 414.80M | 427.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 210.00M | 267.50M | 326.50M | 330.90M | 0.00 | 0.00 | Total Assets |
| 1.15B | 1.29B | 1.21B | 1.09B | 788.00M | 738.00M | Total Debt |
| 1.58B | 1.61B | 1.64B | 1.64B | 4.00M | 5.00M | Net Debt |
| 1.37B | 1.34B | 1.31B | 1.31B | 4.00M | 5.00M | Total Liabilities |
| 1.92B | 2.02B | 2.04B | 1.98B | 194.00M | 166.00M | Stockholders Equity |
| -768.80M | -738.30M | -821.70M | -891.40M | 594.00M | 572.00M |
| Cash Flow | Free Cash Flow | ||||
| 410.90M | 19.90M | 41.20M | 388.20M | 417.00M | 456.60M | Operating Cash Flow |
| 439.40M | 35.70M | 67.70M | 412.20M | 456.00M | 498.50M | Investing Cash Flow |
| -28.50M | -15.80M | -26.50M | -24.00M | -39.00M | -41.90M | Financing Cash Flow |
| -113.00M | -73.40M | -48.70M | -48.00M | -417.00M | -456.60M |
Embecta Corporation Technical Analysis
Neutral
13.96
Price Trends
17.05
Negative
16.72
Negative
15.15
Negative
Market Momentum
-1.05
Negative
45.50
Neutral
67.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EMBC, the sentiment is Neutral. The current price of 13.96 is below the 20-day moving average (MA) of 14.13, below the 50-day MA of 17.05, and below the 200-day MA of 15.15, indicating a neutral trend. The MACD of -1.05 indicates Negative momentum. The RSI at 45.50 is Neutral, neither overbought nor oversold. The STOCH value of 67.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for EMBC.
Embecta Corporation Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $238.23B | 17.96 | 30.95% | 1.63% | 4.59% | 134.50% | |
76 Outperform | $17.23B | 42.39 | 43.03% | ― | 22.07% | 101.95% | |
73 Outperform | $65.31B | 38.13 | 6.92% | 1.71% | 5.89% | 42.05% | |
61 Neutral | $27.64B | 49.64 | 27.63% | ― | 11.34% | 4.24% | |
56 Neutral | $1.19B | ― | -33.30% | ― | 25.74% | 57.18% | |
49 Neutral | $832.49M | 13.89 | -10.61% | 4.30% | -1.31% | 4.59% | |
49 Neutral | $6.90B | -0.08 | -53.01% | 2.43% | 24.84% | -3.06% |
* Healthcare Sector Average
Performance Comparison
EMBC
Embecta Corporation
14.32
0.89
6.63%
ABT
Abbott Laboratories
132.66
14.90
12.65%
BDX
Becton Dickinson
224.92
-9.78
-4.17%
DXCM
Dexcom
70.26
-61.42
-46.64%
PODD
Insulet
248.38
72.84
41.49%
TNDM
Tandem Diabetes Care
17.89
-10.74
-37.51%
Embecta Corporation Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -22.44% | Next Earnings Date: May 9, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed sentiment. While Embecta Corp. showcased strategic initiatives for growth, debt reduction, and restructuring progress, the company reported declines in revenue and gross margins due to ERP implementations and distributor rebalancing. The positive aspects of strategic growth and margin improvements are tempered by significant revenue challenges.Highlights
Strategic Priorities for Growth
Embecta Corp. focuses on strengthening its core business, expanding its product portfolio, and increasing financial flexibility. Plans include a seamless brand transition, product portfolio expansion, and significant debt reduction.
Debt Reduction Initiative
Embecta Corp. aims to pay down approximately $110 million in debt during 2025, enhancing financial agility. The company has already made a $32 million principal payment in the first quarter.
Restructuring Plan Progress
The restructuring plan related to the discontinuation of the insulin patch pump program is on track, with completion expected by the end of the first half of fiscal year 2025.
Improved Operating and EBITDA Margins
Raised adjusted operating and EBITDA margin guidance ranges, driven by cost containment efforts, despite foreign exchange headwinds.
Safety Products Growth
Safety products grew approximately 11.3% due to share gains as a competitor exited the market.
Lowlights
Revenue Decline
First quarter revenue was $262 million, a 5.6% decline year-over-year on a reported basis and a 4.8% decline on an adjusted constant currency basis. The decline was due to ERP implementations and distributor rebalancing.
Gross Profit and Margin Decline
GAAP gross profit and margin for the first quarter decreased to $157.1 million and 60%, respectively, from $185.9 million and 67% in the prior year period.
International Revenue Decline
International revenue fell 5.1% on an adjusted currency basis due to distributor rebalancing and challenging comparisons from the prior year.
Pen Needle Revenue Decline
Pen needle revenue declined approximately 8.5%, primarily due to inventory adjustments and ERP implementation impacts.
Company Guidance
During Embecta Corp.'s fiscal first quarter 2025 earnings conference call, the company provided updated financial guidance and discussed several key metrics. The company reported a revenue of approximately $261.9 million, marking a 5.6% decline year-over-year on a reported basis and a 4.8% decline on an adjusted constant currency basis. Despite these declines, Embecta exceeded internal expectations for Q1, primarily due to timing and lower SG&A expenses. The adjusted gross margin for the quarter was 62.7%, and the adjusted EBITDA margin improved to 37.2%. Embecta reaffirmed its constant currency revenue guidance, projecting a decline between 1% and 2.5% for fiscal 2025, and raised its adjusted operating margin guidance to a range of 29.5% to 30.5%. Additionally, the company is focused on reducing debt by approximately $110 million during the year and maintaining its adjusted earnings per share guidance between $2.70 and $2.90, despite foreign exchange headwinds.Embecta Corporation Corporate Events
Executive/Board Changes
Embecta Corp Appoints Anthony Roth as VP and CAO
Positive
Dec 2, 2024
Embecta Corp. has appointed Anthony Roth as Vice President and Chief Accounting Officer, effective December 2, 2024. Roth brings extensive experience from Ascential plc and Summit Health, enhancing Embecta’s financial leadership. His compensation package includes a $400,000 base salary, incentives, and stock units, aligning with Tier III executive benefits. This strategic leadership move aims to bolster Embecta’s financial operations and growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.