Will NetApp's Earnings Keep It in Play?

On Tuesday, NetApp (NASDAQ: NTAP  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

NetApp specializes in network storage solutions, and with the increasing importance of collecting and analyzing data, NetApp's products have become increasingly vital in helping customers make the most of the information they gather. Let's take an early look at what's been happening with NetApp over the past quarter and what we're likely to see in its quarterly report.

Stats on NetApp

Analyst EPS Estimate

$0.68

Change From Year-Ago EPS

3%

Revenue Estimate

$1.76 billion

Change From Year-Ago Revenue

3.1%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can NetApp's earnings keep climbing this quarter?
Analysts have stayed firm in recent months on their views of NetApp's earnings prospects, with no change to their estimates for either the most-recent quarter or the fiscal 2014 year. The stock has made modest gains of between 5% and 6% since mid-February.

In general, NetApp has done a good job of producing solid growth recently. By tapping into the Big Data trend, NetApp has been able to raise its revenue by nearly 60% and boost net income by more than 50% between 2010 and 2012, with its focus on incremental market-share gains paying off for the company.

Yet NetApp certainly doesn't have the industry to itself. In February, rival EMC (NYSE: EMC  ) announced earnings that showed a big bounce from past weakness, with an 8% gain in revenue that doubled NetApp's growth rate over the same period. As EMC continues to boost its margins and profitability with an increased focus on high-end products, NetApp will have to counter EMC's moves to sustain its competitive position in the space.

One interesting conjecture is the idea that NetApp could be an acquisition target. Although Oracle (NYSE: ORCL  ) recently made a big buyout in picking up Acme Packet, adding NetApp's Big Data exposure to its broad-reaching IT business would give Oracle a leg up in its fight against other tech giants, many of which are using the same strategy of seeking to expand with wider offerings of services. In addition, news last week that activist investor Elliott Management had taken a sizable stake in NetApp and might seek internal changes that would include a potential return of capital to shareholders could make the stock look even more attractive.

In NetApp's quarterly report, make sure to watch for the company's planned strategy for taking advantage of the increasing focus on Big Data. With such a monumental opportunity, NetApp has to step up and take full advantage of the good times for the company while they last.

The amount of data we store every year is growing by a mind-boggling 60% annually! To make sense of this trend and pick out a winner, The Motley Fool has compiled a new report called "The Only Stock You Need to Profit From the NEW Technology Revolution." The report highlights a company that has gained 300% since first recommended by Fool analysts but still has plenty of room left to run. To get instant access to the name of this company transforming the IT industry, click here -- it's free.

Click here to add NetApp to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2439696, ~/Articles/ArticleHandler.aspx, 9/18/2014 3:52:45 PM

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