Sonic Healthcare Limited reports earnings miss: Here's what you need to know

Sonic Healthcare Limited (ASX:SHL)'s first half was a little disappointing, but how will its second half play out?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Leading international medical diagnostics company Sonic Healthcare Limited (ASX: SHL) reported a slight decline in net profit for the six months ended 31 December 2014, which it blamed on "challenging market conditions" in two of its key markets.

Despite the decline in profit, Sonic Healthcare still increased its interim dividend by 2 cents or 7.4% to 29 cents.

So What: Sonic Healthcare reported a net profit of $174 million for its first-half operations on the back of a 6.1% lift in revenues ($2.014 billion), which was in line with guidance provided by the company in November last year. While challenging conditions in its Australian Pathology and USA markets impacted the result, the company said volumes had strengthened more recently, which together with cost initiatives, should underpin earnings growth in the second half of the financial year.

At the same time, Sonic Healthcare's German and UK businesses performed strongly, while it also announced that it would begin providing laboratory services in Canada – a very strategic move for the company.

Now What: The stock fell 0.5% early in the session, although it has gained nearly 12% over the last 12 months. This compares favourably to the S&P/ASX 200's (Index: ^AXJO) (ASX: XJO) 9.6% return and the 5.8% return from rival Primary Health Care Limited (ASX: PRY).

Sonic Healthcare said it was still on track to deliver earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 2-4%, while it also expects a currency tailwind for the remainder of the year. Indeed, Sonic Healthcare's long-term growth prospects remain very impressive, but there's another stock which could be an even better buy today.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »