Neogen Earnings: An Early Look

Earnings season is just about over, with almost all companies already having reported their quarterly results. But there are still a few companies left to report, and Neogen (NASDAQ: NEOG  ) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Food is obviously a necessity, but the importance of food quality control has only grown in importance over the years. Neogen aims to help pinpoint problems with its diagnostic testing kits to find potentially dangerous substances in our food. Let's take an early look at what's been happening with Neogen over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on Neogen

Analyst EPS Estimate	$0.27
Change From Year-Ago EPS	23%
Revenue Estimate	$50.8 million
Change From Year-Ago Revenue	13.2%
Earnings Beats in Past 4 Quarters	2

Source: Yahoo! Finance.

Will Neogen stay healthy this quarter?
Analysts have been cautiously optimistic about Neogen in recent months, keeping their earnings estimates steady for the just-ended quarter but raising their views on the full 2013 fiscal year by a penny per share. The stock has also provided some modest gains, rising about 5% since mid-December.

Neogen makes a variety of tests intended to discover whether foodborne pathogens, drug and pesticide residue, and organisms resulting from spoiled food cause a threat to consumers of food products. Neogen's customers include food companies from across the industry, ranging from meat and poultry processing to grains and dairies. The company also serves makers of pharmaceuticals and vaccines to help ensure quality.

The big news for Neogen during the quarter came in early January, when the FDA suggested revisions to the way that food safety gets regulated domestically. With grocery stores across the country having had to make several high-profile recalls in recent years, food producer ConAgra (NYSE: CAG  ) has come out in favor of requiring more stringent testing to ensure that products retain their quality throughout the production and distribution process. That in turn should give Neogen's tests a wider audience.

Yet Neogen doesn't have the food diagnostics business to itself. 3M (NYSE: MMM  ) has an extensive set of tests covering pathogens and microbes for fruit and vegetable companies, and with its stronger brand awareness, it could pose a threat to Neogen's niche in the long run.

In its quarterly report, watch for Neogen to discuss various paths for growth, such as the new FDA rules and the horse-meat controversy in Europe. As food production gets more complex, Neogen stands to benefit from the increased need to ensure food safety from farm to checkout.

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