For the quarter ended September 2024, Idexx Laboratories (IDXX) reported revenue of $975.54 million, up 6.6% over the same period last year. EPS came in at $2.80, compared to $2.53 in the year-ago quarter.The reported revenue represents a surprise of -0.41% over the Zacks Consensus Estimate of $979.59 million. With the consensus EPS estimate being $2.69, the EPS surprise was +4.09%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wal ...

Idexx Laboratories (IDXX) came out with quarterly earnings of $2.80 per share, beating the Zacks Consensus Estimate of $2.69 per share. This compares to earnings of $2.53 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 4.09%. A quarter ago, it was expected that this Animal diagnostic and health care company would post earnings of $2.87 per share when it actually produced earnings of $2.44, delivering a surprise of -14.98%.Over ...

[Third Quarter 2024 Financial Highlights](index=1&type=section&id=Third%20Quarter%202024%20Financial%20Highlights) IDEXX reported strong third-quarter performance with 7% revenue growth and an 11% increase in EPS, driven by robust CAG Diagnostics recurring revenue and operating margin expansion [Q3 2024 Key Performance Metrics](index=1&type=section&id=Q3%202024%20Key%20Performance%20Metrics) IDEXX achieved 7% reported and 6% organic revenue growth in the third quarter, driven by strong performance in CAG Diagnostics recurring revenue. EPS increased by 11% to $2.80, benefiting from a 110 basis point expansion in operating margin Q3 2024 Financial Highlights | Metric | Value | Growth (As Reported) | Growth (Organic/Comparable) | | :--- | :--- | :--- | :--- | | Revenue | $976 million | 7% | 6% | | CAG Diagnostics Recurring Revenue | - | 7% | 7% | | EPS | $2.80 | 11% | 12% | | Operating Margin Expansion | - | 110 bps | 100 bps | - Growth was supported by strong execution, including continued new business gains and double-digit year-over-year growth in the global premium instrument installed base[1](index=1&type=chunk) [Updated 2024 Full-Year Guidance](index=1&type=section&id=Updated%202024%20Full-Year%20Guidance) The company adjusted its 2024 revenue guidance downward by approximately 1% at the midpoint to $3,865 - $3,890 million, citing negative macroeconomic impacts on pet owner visits in the U.S. However, the EPS outlook midpoint was maintained at $10.37 - $10.53, supported by solid operating margin performance and lower projected interest and tax expenses Updated 2024 Full-Year Guidance | Metric | Updated 2024 Guidance | | :--- | :--- | | Revenue | $3,865 million - $3,890 million | | Revenue Growth (Reported) | 5.5% - 6.2% | | Revenue Growth (Organic) | 5.3% - 6.0% | | EPS | $10.37 - $10.53 | - The revenue guidance reduction incorporates expectations for near-term negative impacts from macro and sector conditions that are constraining pet owner visits and demand at U.S. veterinary clinics[2](index=2&type=chunk) [Third Quarter 2024 Performance Analysis](index=2&type=section&id=Third%20Quarter%202024%20Performance%20Analysis) The company's third-quarter performance was driven by strong CAG and Water segment growth, while the LPD segment experienced a decline [Segment Performance](index=2&type=section&id=Segment%20Performance) The Companion Animal Group (CAG) was the primary growth driver with 7% reported revenue growth. The Water segment also showed strong performance, growing 13%. In contrast, the Livestock, Poultry and Dairy (LPD) segment experienced a 3% revenue decline due to weakness in the Asia Pacific region [Companion Animal Group (CAG)](index=2&type=section&id=Companion%20Animal%20Group%20(CAG)) CAG revenue grew 7% as reported and 6% organically, supported by a 7% increase in diagnostics recurring revenue. Growth was strong internationally (10%) and outpaced the sector in the U.S. (5%). IDEXX VetLab consumables were a key contributor with 11% growth, while reference lab services grew more modestly at 2% organically CAG Revenue Growth Breakdown (Q3 2024) | Category | Reported Growth (%) | Organic Growth (%) | | :--- | :--- | :--- | | **Total CAG** | **7%** | **6%** | | CAG Diagnostics Recurring Revenue | 7% | 7% | | - U.S. | 5% | 5% | | - International | 10% | 10% | | IDEXX VetLab Consumables | 11% | 11% | | Reference Lab Services | 3% | 2% | | Rapid Assay Products | 6% | 6% | | Vet Software, Services & Imaging | 11% | 6% | [Water](index=3&type=section&id=Water) The Water segment delivered robust performance, with revenues growing 13% on both a reported and organic basis. This growth was driven by double-digit gains in the U.S. and continued solid growth in Europe - Water revenues grew **13%** as reported and organic, reflecting double-digit gains in the U.S. and solid growth in Europe[12](index=12&type=chunk) [Livestock, Poultry and Dairy (LPD)](index=3&type=section&id=Livestock%2C%20Poultry%20and%20Dairy%20(LPD)) LPD revenues declined by 3% as reported and 2% organically. While the U.S. and global poultry tests showed solid gains, these were more than offset by lower revenues in the Asia Pacific region, particularly from reduced swine testing and herd health screening - LPD revenues declined **3%** as reported (**2%** organic), with gains in U.S. and poultry tests offset by lower Asia Pacific revenues from reduced swine testing[13](index=13&type=chunk) [Profitability Analysis](index=3&type=section&id=Profitability%20Analysis) The company's profitability improved in the third quarter, with gross margin expanding by 120 basis points to 61.1% and operating margin increasing by 110 basis points to 31.2%. Margin expansion was driven by a favorable business mix, particularly high growth in VetLab consumables and software recurring revenues, and lower instrument costs Q3 2024 Profitability Metrics | Metric | Q3 2024 Value | Change (As Reported) | Change (Comparable) | | :--- | :--- | :--- | :--- | | Gross Profit | - | +9% | +9% | | Gross Margin | 61.1% | +120 bps | +140 bps | | Operating Margin | 31.2% | +110 bps | +100 bps | - Operating expense growth of **7%** was driven by higher sales and marketing expenses and increased R&D spending to support the company's growth and innovation initiatives[15](index=15&type=chunk) [2024 Full-Year Financial Outlook](index=3&type=section&id=2024%20Full-Year%20Financial%20Outlook) IDEXX updated its 2024 full-year guidance, adjusting revenue expectations while maintaining its EPS outlook due to offsetting factors [Updated Guidance Details](index=3&type=section&id=Updated%20Guidance%20Details) IDEXX updated its full-year 2024 guidance, reducing the revenue forecast to $3,865 - $3,890 million (5.3% - 6.0% organic growth) due to moderating U.S. clinical visit trends. The operating margin outlook remains consistent at 28.7% - 29.0%. The EPS range was narrowed to $10.37 - $10.53, maintaining the midpoint as the revenue impact was offset by favorable foreign exchange, interest expense, and tax rate estimates 2024 Full-Year Financial Outlook Comparison | Metric | Updated Outlook | Prior Outlook | | :--- | :--- | :--- | | Revenue | $3,865 million - $3,890 million | $3,885 million - $3,945 million | | Organic Growth | 5.3% - 6.0% | 6.2% - 7.8% | | Operating Margin | 28.7% - 29.0% | 28.7% - 29.0% | | EPS | $10.37 - $10.53 | $10.31 - $10.59 | | Comparable EPS Growth | 10% - 11% | 9% - 12% | | Capital Expenditures | ~$160 million | ~$180 million | - The updated guidance includes a **~$15 million** favorable impact from recent foreign exchange estimates[16](index=16&type=chunk) - The full-year operating margin outlook includes a negative impact of **~160 basis points** from a discrete litigation expense accrual[17](index=17&type=chunk) [Foreign Currency Assumptions](index=5&type=section&id=Foreign%20Currency%20Assumptions) The company's 2024 financial outlook is based on updated foreign currency exchange rate assumptions. The net impact of currency is estimated to be favorable by approximately 20 basis points on revenue growth and result in a negative impact of about $0.03 on EPS for the full year 2024 Foreign Currency Exchange Rate Assumptions (vs. USD) | Currency | Assumed Rate | | :--- | :--- | | Euro | $1.08 | | British Pound | $1.29 | | Canadian Dollar | $0.72 | | Australian Dollar | $0.66 | | Japanese Yen | ¥152 | | Chinese Renminbi | ¥7.18 | - Estimated foreign currency exchange rates are expected to have a favorable impact of **~20 bps** on both total revenue growth and CAG Diagnostics recurring revenue growth for 2024[20](index=20&type=chunk) [Financial Statements and Supplementary Data](index=12&type=section&id=Financial%20Statements%20and%20Supplementary%20Data) This section provides detailed financial statements, including the consolidated statement of operations, segment information, balance sheet, and cash flow statement [Condensed Consolidated Statement of Operations](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations) For the third quarter of 2024, IDEXX reported total revenues of $975.5 million, up from $915.5 million in the prior year. Net income attributable to stockholders increased to $232.8 million, or $2.80 per diluted share, compared to $212.2 million, or $2.53 per diluted share, in Q3 2023 Q3 2024 Statement of Operations Highlights (in thousands) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenue | $975,543 | $915,527 | | Gross Profit | $596,038 | $547,982 | | Income from Operations | $303,892 | $275,283 | | Net Income | $232,841 | $212,231 | | Diluted EPS | $2.80 | $2.53 | [Segment Information](index=13&type=section&id=Segment%20Information) In Q3 2024, the Companion Animal Group (CAG) was the largest segment, contributing $892.0 million in revenue and $277.1 million in operating income. The Water segment generated $50.2 million in revenue and $23.6 million in operating income, while the LPD segment had $29.0 million in revenue and $0.9 million in operating income Q3 2024 Revenue and Operating Income by Segment (in thousands) | Segment | Revenue | Income from Operations | | :--- | :--- | :--- | | CAG | $891,990 | $277,082 | | Water | $50,162 | $23,608 | | LPD | $28,992 | $889 | | Other | $4,399 | $2,313 | | **Total** | **$975,543** | **$303,892** | [Revenue Growth Analysis](index=14&type=section&id=Revenue%20Growth%20Analysis) For Q3 2024, total company organic revenue growth was 6.1%, with the U.S. growing 5.2% and International markets growing 7.8%. Within CAG, recurring diagnostics revenue grew 6.7% organically, led by 11.1% growth in IDEXX VetLab consumables. For the nine months ended, total company organic growth was 6.6% Q3 2024 Organic Revenue Growth by Segment and Geography | Category | Organic Revenue Growth (%) | | :--- | :--- | | **Total Company** | **6.1%** | | - United States | 5.2% | | - International | 7.8% | | **CAG Segment** | **6.0%** | | - CAG Diagnostics Recurring | 6.7% | | **Water Segment** | **13.2%** | | **LPD Segment** | **(2.4)%** | [Condensed Consolidated Balance Sheet](index=16&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of September 30, 2024, IDEXX had total assets of $3.35 billion, compared to $3.26 billion at the end of 2023. Total stockholders' equity increased to $1.62 billion from $1.48 billion over the same period. Cash and cash equivalents stood at $308.6 million Balance Sheet Highlights (in thousands) | Account | Sept 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $308,636 | $453,932 | | Total current assets | $1,433,744 | $1,495,254 | | Total assets | $3,350,766 | $3,259,925 | | Total current liabilities | $1,009,224 | $951,547 | | Total long-term debt | $524,758 | $622,883 | | Total stockholders' equity | $1,618,054 | $1,484,530 | [Condensed Consolidated Statement of Cash Flows](index=17&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the nine months ended September 30, 2024, net cash provided by operating activities was $667.0 million. The company used $167.2 million in investing activities, primarily for business acquisitions and equipment purchases, and $645.3 million in financing activities, largely due to $591.0 million in common stock repurchases. Free cash flow for the nine-month period was $575.3 million Nine Months 2024 Cash Flow Summary (in thousands) | Category | Nine Months Ended Sept 30, 2024 | | :--- | :--- | | Net cash provided by operating activities | $666,976 | | Net cash used by investing activities | ($167,219) | | Net cash used by financing activities | ($645,291) | | Net (decrease) in cash | ($145,296) | | **Free Cash Flow** | **$575,309** | [Non-GAAP Financial Measures and Other Disclosures](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Other%20Disclosures) This section clarifies the company's use of non-GAAP financial measures and provides details on an ongoing litigation matter [Explanation of Non-GAAP Measures](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company uses several non-GAAP financial measures, such as organic revenue growth, constant currency, comparable growth metrics, and free cash flow, to provide supplemental information for evaluating business performance. These measures exclude items like foreign currency impacts, acquisitions, and other non-recurring or unusual items to facilitate period-over-period comparisons - **Organic Revenue Growth:** Represents revenue growth net of impacts from changes in foreign currency exchange rates, business acquisitions, and divestitures[27](index=27&type=chunk) - **Comparable Growth Metrics (e.g., Comparable EPS Growth):** Excludes the impact of foreign currency changes, non-recurring items (like the ongoing litigation matter), and tax benefits from share-based compensation[30](index=30&type=chunk)[32](index=32&type=chunk) - **Free Cash Flow:** Defined as cash generated from operations reduced by investments in property and equipment[36](index=36&type=chunk) [Reconciliation of Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) The report provides detailed reconciliations of GAAP to non-GAAP measures. For Q3 2024, reported EPS of $2.80 reconciles to a comparable EPS of $2.79 after adjustments. Similarly, the 110 bps reported operating margin gain reconciles to a 100 bps comparable gain after excluding currency effects Q3 2024 EPS Reconciliation (GAAP to Comparable) | Description | Per Share Amount | | :--- | :--- | | **Diluted EPS (as reported)** | **$2.80** | | Change from currency | $0.01 | | **Comparable EPS** | **$2.79** | Q3 2024 Operating Margin Reconciliation (GAAP to Comparable) | Description | Margin | Gain | | :--- | :--- | :--- | | **Operating Margin (as reported)** | **31.2%** | **110 bps** | | Change from currency | (0.2%) | (10 bps) | | **Comparable Operating Margin** | **31.0%** | **100 bps** | [Ongoing Litigation Matter](index=11&type=section&id=Ongoing%20Litigation%20Matter) The company is a defendant in an ongoing litigation matter concerning an alleged breach of contract for underpayment of royalty payments. In the second quarter of 2024, the company increased its accrual for this matter by $61.5 million, bringing the total accrual to $89.0 million, which represents its best estimate of the probable loss - The company increased its litigation accrual by **$61.5 million** in Q2 2024, resulting in a total accrual of **$89.0 million** for an ongoing matter related to alleged underpayment of royalties[38](index=38&type=chunk)[39](index=39&type=chunk)

In its upcoming report, Idexx Laboratories (IDXX) is predicted by Wall Street analysts to post quarterly earnings of $2.69 per share, reflecting an increase of 6.3% compared to the same period last year. Revenues are forecasted to be $979.05 million, representing a year-over-year increase of 6.9%. Over the last 30 days, there has been a downward revision of 0.1% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of th ...

Core Viewpoint - IDEXX Laboratories, Inc. is expected to report its third-quarter 2024 results on October 31, with revenue estimates indicating a 7% year-over-year increase to $979.3 million and EPS expected to rise by 6.3% to $2.69 [1][2]. Group 1: Earnings Performance - In the last reported quarter, IDEXX posted adjusted EPS of $2.44, missing the Zacks Consensus Estimate by 14.98% [1]. - The company has beaten earnings estimates in three of the last four quarters, with an average surprise of 1.51% [1]. Group 2: Revenue Estimates - The Zacks Consensus Estimate for third-quarter 2024 revenues is $979.3 million, reflecting a 7% increase from the previous year [2]. - The Water segment is projected to see an 8% year-over-year revenue improvement, while the Livestock, Poultry, and Dairy segment is expected to have a modest 0.1% increase [10][11]. Group 3: Factors Influencing Performance - The Companion Animal Group (CAG) is anticipated to benefit from improved global net prices and international organic growth, supported by strong execution of strategies [4]. - Diagnostic utilization per clinical visit is expected to have expanded, contributing to higher diagnostic revenue [5]. - IDEXX VetLab consumables are likely to show strong organic growth, driven by performance in the U.S. and international markets [6]. Group 4: Market Dynamics - The U.S. CAG Diagnostics' recurring revenues are expected to be bolstered by new business gains and high customer retention levels [5]. - Global lab revenues are anticipated to surge due to strong U.S. performance and growth in international regions [8]. - The veterinary software and diagnostic imaging revenues are expected to benefit from the recent acquisition of Greenline software and data platform [8].

It has been about a month since the last earnings report for Idexx Laboratories (IDXX) . Shares have added about 0.9% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Idexx due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. IDEXX Misses Q2 Earnings Estimates, Narro ...

Core Insights - Idexx Laboratories Inc reported second-quarter adjusted EPS of $3.02, a 15% increase year-over-year, surpassing the consensus estimate of $2.88 [1] - The company achieved sales of $1 billion, reflecting a 6% increase as reported and 7% organically, closely aligning with the consensus of $1.01 billion [1] - Revenue growth was primarily driven by a 6% increase in the Companion Animal Group and a 9% increase in Water revenue [1] Financial Performance - The gross margin improved to 61.7%, up by 100 basis points as reported and 90 basis points on a comparable basis, aided by net price realization and favorable business mix [3] - Operating margin for the quarter was 26.3%, down 510 basis points from the previous year, impacted by a $62 million discrete litigation expense accrual [3] Guidance and Outlook - Idexx Laboratories forecasts 2024 revenue between $3.885 billion and $3.945 billion, slightly lower than prior guidance [4] - The company expects adjusted 2024 EPS in the range of $10.31 to $10.59, reflecting the impact of litigation expenses and expectations for operating margin improvement [4] Market Trends - Analysts noted that slower growth this quarter was influenced by a decline in vet office visits, a trend observed over several quarters [5] - Despite these trends, analysts believe Idexx can meet its updated outlook range, reaffirming the resilience of the global animal health market [5] Stock Performance - Following the earnings report, IDXX stock rose by 4.65%, reaching $476.25 [6]

Financial Data and Key Metrics Changes - Overall revenues increased by 7% organically, with CAG diagnostic recurring revenues growing by 7% and water business by 10% [4][6] - EPS was reported at $2.44, down 9% due to a $0.56 per share impact from a $62 million discrete expense accrual related to ongoing litigation [5][13] - Comparable EPS growth was 15%, supported by solid gross margin gains and lower net interest costs [5][13] Business Line Data and Key Metrics Changes - CAG organic revenue growth was supported by 8% organic gains in veterinary software and diagnostic imaging revenues, with a 12% increase in recurring revenues [6][10] - CAG instrument revenue increased by 5% organically, while diagnostic recurring revenue increased by 7% [7][10] - Global rapid assay revenues expanded by 6% organically, driven by solid gains in the U.S. [11] Market Data and Key Metrics Changes - U.S. CAG diagnostic recurring revenue growth was 5.2%, net of a 0.5% U.S. equivalent day growth headwind [8][9] - International growth was strong, with 10% organic gains in CAG diagnostic recurring revenues [7][10] - The decline in U.S. same-store clinical visit growth levels was noted, with a 2% decline in Q2 [5][9] Company Strategy and Development Direction - IDEXX is focused on innovation in companion animal diagnostics, aiming to drive growth through new product development and high-quality customer engagement [19][20] - The company is addressing transitional growth headwinds while maintaining solid growth ahead of sector levels [21][22] - Continued investment in R&D and commercial expansion is emphasized to support long-term growth [56][57] Management Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macro dynamics affecting clinical visit trends and expressed confidence in long-term growth drivers for pet healthcare [36][38] - The company expects continued pressure on U.S. clinical visit levels in the second half of 2024, impacting organic revenue growth [15][16] - Management remains optimistic about the long-term demand for diagnostics, driven by pet population growth and increased pet lifespans [19][38] Other Important Information - The company updated its full-year guidance for organic revenue growth to 6.2% to 7.8% [15][16] - A $62 million discrete expense accrual related to litigation was disclosed, impacting reported operating margins [13][54] - Free cash flow was reported at $215 million in Q2, with a net income to free cash flow conversion ratio of 99% [13] Q&A Session Summary Question: What is the biggest delta between the outlook given in Q1 and the current outlook? - Management noted a 150 basis points headwind affecting clinical visits and acknowledged macro dynamics impacting the outlook [36][37] Question: Are long-term growth drivers for vet visits still intact? - Management remains optimistic about long-term trends, including the humanization of pets and increased spending on pet healthcare [38] Question: What is the nature of the legal charge and ongoing litigation? - The $62 million discrete expense accrual relates to royalty payments, with management not commenting further on ongoing litigation [54] Question: How does the company control costs amid market challenges? - Management highlighted effective cost management and continued investment in R&D and commercial initiatives to drive future growth [55][56] Question: What is embedded in guidance regarding the inVue contribution? - Expectations for the Q4 launch of inVue are included in the guidance, with recurring revenue expected to build over time [58][59]

IDEXX Laboratories, Inc. (IDXX) posted second-quarter 2024 earnings per share (EPS) of $2.44, down 8.6% year over year. The figure missed the Zacks Consensus Estimate by 14.9%. Comparable constant-currency EPS of $3.02 improved 14.8% year over year. Revenues in Detail Quarterly revenues increased 6.4% year over year (up 7% organically) to $1.00 billion. The reported figure was in line with the Zacks Consensus Estimate. The year-over-year upside was primarily driven by a strong improvement in Companion Anima ...

Core Insights - Idexx Laboratories reported revenue of $1 billion for the quarter ended June 2024, reflecting a year-over-year increase of 6.4% and a slight revenue surprise of +0.11% over the Zacks Consensus Estimate [1] - The company's EPS was $2.44, down from $2.67 in the same quarter last year, resulting in an EPS surprise of -14.98% compared to the consensus estimate of $2.87 [1] Revenue Performance by Segment - **Companion Animal Group - United States**: Revenue was $628.68 million, slightly below the estimated $637.35 million, representing a year-over-year increase of +5.8% [3] - **Companion Animal Group - International**: Revenue reached $293.61 million, exceeding the estimated $282.88 million, with a year-over-year growth of +7.8% [4] - **Livestock and Poultry Diagnostics (LPD) - International**: Revenue was $25.19 million, surpassing the average estimate of $24.42 million, but showing a year-over-year decline of -1.2% [5] - **Water - International**: Revenue was $22.27 million, slightly below the estimated $22.92 million, with a year-over-year increase of +2% [6] - **Companion Animal Group (CAG)**: Total revenue was $922.30 million, marginally below the estimated $923.58 million, reflecting a year-over-year increase of +6.4% [7] - **Other Revenue**: Revenue was $4.25 million, exceeding the average estimate of $4.07 million, with a year-over-year growth of +5.2% [8] - **Livestock and Poultry Diagnostics (LPD)**: Revenue was $30.31 million, slightly above the estimated $29.98 million, with a year-over-year increase of +1.3% [9] - **Water Revenue**: Revenue was $46.73 million, surpassing the estimated $45.93 million, reflecting a year-over-year increase of +8.6% [9] - **IDEXX VetLab Consumables**: Revenue was $325.35 million, slightly above the estimated $324.54 million, with a year-over-year growth of +7.1% [10] - **CAG Diagnostics Capital - Instruments**: Revenue was $35.29 million, exceeding the average estimate of $34.87 million, with a year-over-year increase of +3.6% [11] - **CAG - Reference Laboratory Diagnostic and Consulting Services**: Revenue was $347.37 million, below the estimated $351.67 million, reflecting a year-over-year increase of +5.2% [12] - **CAG - Rapid Assay Products**: Revenue was $103.29 million, exceeding the estimated $100.59 million, with a year-over-year growth of +6.1% [13] Stock Performance - Idexx shares have returned -5.9% over the past month, compared to a -6.7% change in the Zacks S&P 500 composite, indicating potential underperformance in the near term [13]