Mellanox Technologies Earnings: Here’s Why Investors are Not Excited Now

Mellanox Technologies, Ltd. (NASDAQ:MLNX) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 10%.

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Mellanox Technologies, Ltd. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 80.39% to $0.10 in the quarter versus EPS of $0.51 in the year-earlier quarter.

Revenue: Decreased 6.36% to $83.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Mellanox Technologies, Ltd. reported adjusted EPS income of $0.10 per share. By that measure, the company beat the mean analyst estimate of $0.04. It beat the average revenue estimate of $80.77 million.

Quoting Management: “Despite the decline in our financial results over the past two quarters, we believe increased demand will restore growth in coming quarters,” said Eyal Waldman, president, CEO and chairman of Mellanox Technologies. “In the first quarter, our FDR InfiniBand revenue share increased from 39 percent to 50 percent, demonstrating the continued demand for our highest performing InfiniBand products. We expect that our future growth will be driven by the increased adoption of FDR InfiniBand as well our 10/40/56Gb/s Ethernet products.”

Key Stats (on next page)…

Revenue decreased 31.95% from $122.12 million in the previous quarter. EPS decreased 85.51% from $0.69 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.82 to a profit $0.43. For the current year, the average estimate has moved down from a profit of $3.35 to a profit of $1.84 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)