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Netgear Beats Up On Analysts Yet Again

Netgear (Nasdaq: NTGR  ) reported earnings on Feb. 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Netgear met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased significantly and GAAP earnings per share expanded significantly.

Gross margins dropped, operating margins improved, net margins increased.

Revenue details
Netgear logged revenue of $309.2 million. The eight analysts polled by S&P Capital IQ expected a top line of $306.9 million. Sales were 20% higher than the prior-year quarter's $258.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.69. The eight earnings estimates compiled by S&P Capital IQ averaged $0.62 per share on the same basis. GAAP EPS of $0.60 for Q4 were 62% higher than the prior-year quarter's $0.37 per share.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 30.7%, 90 basis points worse than the prior-year quarter. Operating margin was 10.9%, 100 basis points better than the prior-year quarter. Net margin was 7.4%, 210 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $314.1 million. On the bottom line, the average EPS estimate is $0.65.

Next year's average estimate for revenue is $1.33 billion. The average EPS estimate is $2.75.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 2,270 members out of 2,342 rating the stock outperform, and 72 members rating it underperform. Among 776 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 770 give Netgear a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Netgear is hold, with an average price target of $40.38.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Netgear. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 08, 2012, at 2:29 PM, CMFSoloFool wrote:

    The proliferation of wireless in daily use appliances and gadgets, and the growing demand for network storage will continue to create demand for wireless routing and NAS for the foreseeable future. Every day more and more TVs, DVD players, phones, games, radios, Roku's, ipods, and other devices are becoming connected and wireless. This revolution is not going to slow down, broadband wireless has become ubiquitous, and hot spots are popping up everywhere in coffee shops, restaurants, schools and other public places, not just in people's homes.

    Netgear seems to be right on top of this explosive curve and they are pumping out new, innovative, faster, simpler and better wireless and storage products every quarter. They introduced 20 new products in Q4/11, and they have another 18 lined up for Q1/12.

    This is a rising tide, so everyone in wireless will benefit, but NTGR seems to be taking a leadership role in home and small business wireless. As you can see from the numbers, NTGR had $1.18 billion in revs in 2011, and the CEO Patrick Lo is predicting $2 billion by 2014, and $5 billion in 4-5 years. Cisco (LinkSys), DLink and others are falling behind. They may find ways to compete, but I'm confident NTGR will keep sailing smoothly along.

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10/27/2016 4:00 PM
NTGR $50.35 Down -4.05 -7.44%
Netgear CAPS Rating: ****