The 10-second takeaway
For the quarter ended June 30 (Q2), Digital Generation missed estimates on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share dropped to a loss.
Margins dropped across the board.
Digital Generation notched revenue of $96.3 million. The eight analysts polled by S&P Capital IQ expected a top line of $100.7 million on the same basis. GAAP reported sales were 42% higher than the prior-year quarter's $67.9 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.29. The four earnings estimates compiled by S&P Capital IQ forecast $0.39 per share. GAAP EPS were -$0.01 for Q2 against $0.37 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 63.8%, 240 basis points worse than the prior-year quarter. Operating margin was 12.3%, 1,930 basis points worse than the prior-year quarter. Net margin was -0.3%, 1,540 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $99.3 million. On the bottom line, the average EPS estimate is $0.30.
Next year's average estimate for revenue is $406.7 million. The average EPS estimate is $1.24.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 250 members out of 265 rating the stock outperform, and 15 members rating it underperform. Among 44 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 41 give Digital Generation a green thumbs-up, and three give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Digital Generation is outperform, with an average price target of $16.57.
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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. 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.