FARO Technologies Earnings Preview

While FARO Technologies (Nasdaq: FARO  ) missed estimates last quarter, investors hope that it will bounce back and outpace Wall Street expectations this quarter. The company will unveil its latest earnings Wednesday. Faro Technologies designs, develops, manufactures, markets, and supports portable, software-driven, three-D measurement and imaging systems used in a range of manufacturing, industrial, building construction, and forensic applications.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back FARO Technologies, with four of five rating it a buy and the remainder rating it a hold. Analysts like FARO Technologies better than competitor MTS Systems overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared with three months ago.
  • Revenue Forecasts: On average, analysts predict $62.4 million in revenue this quarter. That would represent a rise of 37.7% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.29 per share. Estimates range from $0.26 to $0.35.

What our community says:
CAPS All-Stars are solidly backing the stock with 95.8% awarding it an "outperform" rating. The community at large backs the All-Stars with 94% granting it a rating of "outperform." Fools are bullish on FARO Technologies and haven't been shy with their opinions lately, logging 121 posts in the past 30 days. Despite the majority sentiment in favor of FARO Technologies, the stock has a middling CAPS rating of three out of five stars.

Management:
The company's gross margin shrank by 3.1 percentage points in the last quarter. Revenue rose 30.6% while cost of sales rose 40.7% to $26.2 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

56.1%

57.6%

59.0%

58.3%

Operating Margin

9.6%

8.1%

10.6%

6.3%

Net Margin

7.1%

6.2%

8.3%

5.1%

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