Netgear Inc. (NASDAQ:NTGR) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 2.22%.
Netgear Inc. Earnings Cheat Sheet
Results: Adjusted Earnings Per Share decreased 31.51% to $0.5 in the quarter versus EPS of $0.73 in the year-earlier quarter.
Revenue: Decreased 9.89% to $293.4 million from the year-earlier quarter.
Actual vs. Wall St. Expectations: Netgear Inc. reported adjusted EPS income of $0.5 per share. By that measure, the company missed the mean analyst estimate of $0.56. It missed the average revenue estimate of $297.78 million.
Quoting Management: Patrick Lo, Chairman and Chief Executive Officer of NETGEAR commented, “The lower than expected operating margin in the first quarter was driven by product mix, primarily due to difficulties in the transition to our new ReadyNAS line of products. The transition occurred late in the quarter and difficulty securing components and some last minute bug fixes led to unanticipated delays. This marked the first time we completely replaced an entire line of products, which involved obsoleting ten models and replacing them with seven brand new models. The execution was much harder than anticipated and we learned a valuable lesson in engineering and manufacturing planning. The good news is that our supply is now in full swing and customer feedback on the new product line has been very positive.”
Key Stats (on next page)…
Revenue decreased 5.49% from $310.44 million in the previous quarter. EPS decreased 9.09% from $0.55 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 $0.64 to a profit $0.6. For the current year, the average estimate has moved down from a profit of $2.76 to a profit of $2.56 over the last ninety days.
Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.
(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)