Cree Second Quarter Earnings Sneak Peek

Cree, Inc. (NASDAQ:CREE) will unveil its latest earnings tomorrow, Tuesday, January 22, 2013. Cree develops and manufactures semiconductor materials and devices mainly based on silicon carbide, gallium nitride, and related compounds.

Cree, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of 22 cents per share, a rise of 46.7% from the company’s actual earnings for the year-ago quarter. The average estimate is the same as three months ago. Between one and three months ago, the average estimate moved down. It has risen from 20 cents during the last month. Analysts are projecting profit to rise by 46.8% versus last year to 91 cents.

Past Earnings Performance: Last quarter, the company saw profit of 18 cents per share versus a mean estimate of net income of 18 cents per share. This comes after two consecutive quarters of exceeding expectations.

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A Look Back: In the first quarter, profit rose 25.8% to $16.1 million (14 cents a share) from $12.8 million (11 cents a share) the year earlier, meeting analyst expectations. Revenue rose 17.4% to $315.8 million from $269 million.

Here’s how Cree traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

CREE

Stock Price Performance: Between October 18, 2012 and January 15, 2013, the stock price rose $3.20 (11%), from $28.98 to $32.18. The stock price saw one of its best stretches over the last year between July 30, 2012 and August 10, 2012, when shares rose for 10 straight days, increasing 17.9% (+$4.27) over that span. It saw one of its worst periods between October 2, 2012 and October 9, 2012 when shares fell for six straight days, dropping 3.5% (-91 cents) over that span.

Wall St. Revenue Expectations: On average, analysts predict $330.9 million in revenue this quarter, a rise of 8.8% from the year-ago quarter. Analysts are forecasting total revenue of $1.32 billion for the year, a rise of 13.8% from last year’s revenue of $1.16 billion.

Key Stats:

The company enters this earnings announcement with substantial revenue momentum. The company has averaged year-over-year revenue growth of 23% over the last four quarters.

Last quarter’s earnings rise was a switch from preceding drops, so the upcoming earnings announcement is a chance to build on last quarter’s result. Net income fell in the second quarter of the last fiscal year, the third quarter of the last fiscal year and the fourth quarter of the last fiscal year before snapping that run with a profit increase in the first quarter.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 7.09 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 7.8 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 17.3% to $175 million while assets rose 6.5% to $1.24 billion.

Analyst Ratings: With 12 analysts rating the stock as a buy, four rating it as a sell and eight rating it as a hold, there are indications of a bullish outlook.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)