Mapping software maker Navteq (NYSE:NVT) will report second-quarter earnings results Tuesday. To help get a fix on where the company may end up, let's retrace its most recent steps.

What analysts say:

  • Buy, sell, or waffle? A total of 18 analysts rate Navteq, with nine rating it a buy, eight saying "hold," and one recommending a sell.
  • Revenues. On average, analysts estimate a 32% jump in sales, to $180 million.
  • Earnings. Profits are predicted to rise 8% to $0.27 per share.

What management says:
While Navteq sees its mapping data utilized extensively in online applications from the likes of Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO), more substantial growth opportunities come from in-dash automobile units, particularly in U.S. models from automakers such as Honda (NYSE:HMC), Toyota (NYSE:TM), and General Motors (NYSE:GM). In the past quarter, CEO Judson Green noted that the company "saw healthy double-digit increases in both units and revenue ... due to the substantial increase in adoption compared to the prior year." The downside is that "consumers continue to demonstrate a preference for smaller, more fuel-efficient vehicles, which generally have much lower navigation take rates."

And while management was proud of particularly strong first-quarter results earlier this year, it noted that much of that gain came simply from the timing of recognized revenue and expenses, rather than fundamental shifts in the business. For this reason, management kept guidance for the year unchanged.

What management does:
Navteq's margins took a nice tick up in the first quarter, reflecting several nonrecurring items, including:

  1. Positive changes in currency exchange rates
  2. Increased royalty payments from holiday portable navigation device sales
  3. Delayed payment from an Internet customer
  4. Lower-than-planned operating expenses

The trend may prove to be a blip, however, since management is not counting on those benefits continuing for the balance of 2007.  

Margin

12/05

4/06

7/06

10/06

12/06

4/07

Gross

52.6%

52%

51.7%

52%

53.1%

54.1%

Operating

28.9%

27.4%

26.3%

26.7%

28.9%

30.1%

Net

34.4%

33.1%

32%

17.3%

18.9%

20%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Navteq shares got a big boost a week ago, when European GPS maker TomTom announced that it would spend $2.8 billion to buy map supplier Tele Atlas. Investors are speculating that having Tele Atlas under TomTom will reduce direct competition for map data, protecting Navteq from price erosion, and possibly increasing takeover interest from GPS maker Garmin (NASDAQ:GRMN). This Fool in particular is anxious to hear how management thinks the deal will affect the mapping landscape of the future.

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The opportunities ahead of Navteq have made it a two-time Stock Advisor pick. To learn more about why and see the newsletter's other market-beating recommendations, including Garmin and Yahoo!, take a free 30-day trial.

Fool contributor Dave Mock no longer supports the use of tarot cards or psychic readings to help navigate traffic on California freeways. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy knows where it's at, and where it's going.