Melbourne-based biopharmaceutical company CSL (ASX: CSL) has seen its share price rally 23.2% this year, handily outperforming the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) which has increased by 9.8%. The return also beats some of its health sector peers including Sonic Healthcare (ASX: SHL) and Cochlear (ASX: COH) which have returned 19.4% and -28.5% so far this calendar year.
The share price gains were supported by impressive growth in both sales and earnings, with sales growing 7% on a constant currency basis and earnings per share increasing by 26% on a constant currency basis.
Other highlights reported in August when CSL released its full year results were a solid balance sheet with cash on hand of US$762 million and an 18% increase in the full year dividend, which actually led to a 27% gain for Australian shareholders thanks to a boost on currency conversion.
CSL's underlying business continues to impress. The company continues to experience strong sales growth in a number of its product areas, as well as margin expansion which saw earnings before interest and tax margin grow from 26.6% to 29.1%, thanks to efficiency gains and a change in the sales mix across the product portfolio.
The outlook
The all-important outlook statement that companies generally provide with their full year results or at their Annual General Meeting (AGM) is followed closely by investors. At CSL's AGM, management reported that for the first quarter of the current financial year the company was trading in line with expectations. Importantly, management also provided guidance for a 10% increase in net profit after tax this financial year.
Foolish takeaway
The premium nature of CSL's business model commands a premium valuation and CSL's ongoing share buy-back will continue to support growth in earnings per share above profit growth. Given the outlook for double digit growth it's likely that CSL's share price will continue to be supported in 2014, however with a forecast price-to-earnings multiple of around 25 times, the stock is priced for perfection and the market would be unlikely to treat any hiccups with sympathy.
