Why Is CalAmp Corp. Down After-Hours?

CalAmp is down more than 14% on its latest quarterly report. Is this a buying opportunity?

Jul 1, 2014 at 9:28PM

CalAmp stock

CalAmp's recent pullback could be a buying opportunity for long-term investors, Credit: CalAmp

CalAmp Corp. (NASDAQ:CAMP)  released its fiscal first quarter 2015 earnings today and shares fell by as much as 16% in after-hours trading. However, unlike last quarter's across-the-board miss, this time CalAmp's results actually came in ahead of Wall Street's expectations.

Specifically, quarterly revenue rose 10% year over year to $59 million, just edging past the $58 million analysts had expected. That performance was led by a 17% increase in wireless datacom sales to $47.8 million, which easily offset a 14% drop in Satellite revenue to $11.1 million. Meanwhile, CalAmp's adjusted net income grew 23% over the same period to $6.9 million, or $0.19 per share, also beating estimates for earnings just $0.18 per share. 

Also of note is that CalAmp's results were well within its previously guided ranges, which called for fiscal Q1 revenue of $56 million to $60 million, and adjusted net income per share of $0.17 to $0.21. That's all well and good, but at least one analyst chimed in ahead of today's report, effectively inflating expectations with the assertion that guidance was likely conservative.  

Here's why CalAmp stock is down now
But that wasn't the biggest reason for today's after-hours drop. For that, investors must look to CalAmp's fiscal second quarter guidance for revenue of $57 million to $61 million, and adjusted net income per share in the range of $0.17 to $0.21. Analysts were more optimistic, with average estimates for fiscal Q2 sales and earnings of $62.5 million and $0.22 per share, respectively.

CalAmp CEO Michael Burdiek elaborated that fiscal second quarter Wireless Datacom revenue should be higher both sequentially and on a year-over-year basis, thanks both the resumption of shipments to a key OEM customer in the solar power industry and continued healthy consumer demand in most of CalAmp's other verticals. However, that strength will be offset by a "sharp decline" in Positive Train Control revenue, and only a small contribution from Mobile Resource Management products in Latin America.

CalAmp stock

Heavy equipment markets will help drive CalAmp's fiscal year results, Credit: CalAmp

CalAmp's Satellite revenue could also fall sequentially to the lower end of its normal quarterly operating range, and for the full-year is now "anticipated to be below earlier projections." For perspective, last quarter CalAmp expected Satellite to ultimately return to a normalized revenue run rate of around $10 million per quarter. 

The silver lining
This in mind, Burdiek once again insisted "the second half of fiscal 2015 will be significantly stronger than the first [...], with Wireless Datacom revenue growth expected to accelerate as we move through the last two quarters of the year driven by the emerging auto insurance telematics and heavy equipment markets."

And isn't this what has CalAmp investors so excited in the first place?

Keeping in mind last quarter's OEM solar customer hiccup, remember we're still talking about a small-cap stock whose revenue streams are subject to hefty near-term fluctuations if any one sub-segment moves the wrong direction. Call me crazy, but I'm not particularly concerned with lower-than-expected revenue from CalAmp's increasingly less-important Satellite business.

Foolish takeaway
As long as CalAmp's Internet of Things aspirations remain intact with its steadily growing Wireless Datacom segment, so, too, will its enticing long-term growth story.

As it stands, you might recall I opted to watch from the sidelines in the face of CalAmp's near-term weakness last quarter. That said, I'm much more encouraged by CalAmp's most recent results, and the stock is growing increasingly intriguing with shares now trading at a reasonable 15.5 times next fiscal year's expected earnings.

Warren Buffett: This new technology is a "real threat"
Speaking of disruptive tech, Warren Buffett recently admitted that another emerging technology is threatening his biggest cash cow. While Buffett shakes in his billionaire boots, only a few investors are embracing this new market, which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping on to one company that could get you the biggest piece of the action. Click here to access a free investor alert on the company we're calling the brains behind the technology.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends CalAmp. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers