It has been about a month since the last earnings report for Phibro Animal Health (PAHC). Shares have added about 1.1% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Phibro 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 drivers. Phibro Q2 Earnings Surpass Estimates, Margins UpPhibro Animal Health adjusted earnings per share of 34 cents in the second quarter of fiscal 2021 were in line with the year-ago adjusted figure. The figure however exceeded the Zacks Consensus Estimate by 25.9%.Meanwhile, without adjustments, GAAP earnings per share for the second quarter was 32 cents, a significant 10.3% rise from the year-ago count.Net SalesIn the quarter under review, net sales totaled $206.1 million, down 3.7% year over year, primarily due to reduced sales and profitability in the core Animal Health and Mineral Nutrition segment. Vaccine sales declined owing to lower international demand. However, decline of the top line is partially offset by improvement in the Performance Products segment.Segmental Sales Break-UpDuring the fiscal second quarter, Animal Health net sales declined 5.2% to $136.2 million. Within this segment, sales of medicated feed additives and other were $81.6 million, reflecting an 11.3% year-over-year plunge. The decline was due to lower international demand, primarily concentrated in China and Latin America, partially offset by favorable domestic customer order patterns.Within Animal Health, nutritional specialty product sales rose 9.9% to $36.4 million, primarily due to domestic and international growth in dairy products.Apart from this, net vaccine sales totaled $18.3 million, showing a decline of 2.1% year over year due to lower international volume and reduced demand during the quarter.Net sales at the Mineral Nutrition segment fell 2.7% year over year to $54.2 million owing to lower average selling prices, which offset the overall unit volume growth.Net sales at the Performance Products segment rose 8.2% to $15.8 million owing to higher sales of personal care product ingredients. However, this was partially offset by lower sales of copper-based products.MarginsPhibro’s second-quarter gross profit declined 1.3% year over year to $68.2 million. Gross margin expanded 80 basis points (bps) to 33%.Selling, general and administrative expenses in the reported quarter were $48.4 million, down 2.2% from the year-ago quarter.Operating profit rose 1.02% year over year to $19.8 million and operating margin expanded 45 bps to 9.6% in the quarter under review.Financial UpdateThe company exited the second quarter of fiscal 2021 with cash and short-term investments in hand of $96 million compared with $92 million at the end of the first quarter of fiscal 2021.Year to date, cumulative net cash provided by operating activities at the end of the second quarter of fiscal 2021 was $28.6 million compared with net cash used by operating activities of $28.5 million a year ago.Cumulative capital expenditure amounted to $14.7 million at the end of the second quarter of fiscal 2021, reflecting a decrease from the year-ago $16.1 million.OutlookDespite pandemic-led business disruptions across the globe, Phibro has provided its financial guidance for the third quarter of fiscal 2021, boosted by the improving business trends.The company projects net sales for the third quarter of fiscal 2021 in range of $205-$208 million, suggesting a drop from the year-ago $211 million.Adjusted earnings per share is projected in the band of 30-33 cents. The Zacks Consensus Estimate for the metric is pegged at 32 cents.How Have Estimates Been Moving Since Then?Fresh estimates followed an upward path over the past two months.VGM ScoresCurrently, Phibro has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookPhibro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Phibro Animal Health Corporation (PAHC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research