Mentor Graphics Beats on Both Top and Bottom Lines

Mentor Graphics (Nasdaq: MENT  ) reported earnings on Nov. 29. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Oct. 31 (Q3), Mentor Graphics beat slightly on revenues and beat expectations on earnings per share.

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

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

Revenue details
Mentor Graphics recorded revenue of $268.8 million. The seven analysts polled by S&P Capital IQ predicted revenue of $265.2 million on the same basis. GAAP reported sales were 7.3% higher than the prior-year quarter's $250.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.32. The six earnings estimates compiled by S&P Capital IQ predicted $0.28 per share. GAAP EPS of $0.27 for Q3 were 23% higher than the prior-year quarter's $0.22 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 82.0%, 260 basis points worse than the prior-year quarter. Operating margin was 14.4%, 370 basis points better than the prior-year quarter. Net margin was 11.4%, 180 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $346.7 million. On the bottom line, the average EPS estimate is $0.59.

Next year's average estimate for revenue is $1.10 billion. The average EPS estimate is $1.39.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 108 members out of 142 rating the stock outperform, and 34 members rating it underperform. Among 31 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 23 give Mentor Graphics a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Mentor Graphics is buy, with an average price target of $20.43.

Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not Mentor Graphics makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.

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. The Motley Fool has no positions in the stocks mentioned above. 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.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

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.

Be the first one to comment on this article.

DocumentId: 2134614, ~/Articles/ArticleHandler.aspx, 7/29/2014 2:50:08 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement