Please ensure Javascript is enabled for purposes of website accessibility

Why National Instruments Corp. Stock Plunged Today

By Steve Symington – Apr 27, 2018 at 1:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company's top line fell short this quarter. Here's what investors need to know.

What happened

Shares of National Instruments Inc. (NATI 2.62%) were down 16.6% as of 12:30 p.m. EDT Friday, after the specialist in automated test equipment announced mixed first-quarter 2018 results relative to expectations.

On one hand, National Instruments' revenue climbed 3.9% year over year to $311.9 million, which was well below the midpoint of its latest guidance for a range of $305 million to $335 million. On the other hand, that translated to adjusted earnings of $34 million, or $0.26 per share, up from $0.21 per share in last year's first quarter and right at the midpoint of guidance for a range of $0.19 to $0.33.

National Instruments test equipment next to a computer monitor


So what

Nonetheless, CEO Alex Davern lauded his company's "strong" growth in software revenue in the quarter, adding:

We believe our software-based platform is our most critical differentiator, and its continued growth signals strength in our market position. I am also encouraged by the strong performance of our broad-based data acquisition portfolio. These products provide measurement capabilities to systems across many applications and industries, which has long been a strength of NI.

CFO Karen Rapp further noted that despite lower-than-expected overall sales, National Instruments was able to meet its goal for adjusted operating income -- the metric climbed 17% to 40% million during the quarter -- thanks to its disciplined approach in executing its operating model. The company will work to sustain its solid profitability while continuing to build its backlog to improve visibility.

Now what

For the second quarter, National Instruments expects revenue in the range of $320 million to $350 million -- up from $318.6 million in the same year-ago period -- with adjusted earnings per share of $0.23 to $0.37. By comparison, most investors were modeling earnings near the low end of that range on revenue of $343.8 million.

All told, this certainly wasn't a terrible quarter from National Instruments. But the market is obviously concerned that its sales slump will persist. With shares up more than 40% over the past year leading up to this report, then, it's no surprise to see the stock pulling back in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends National Instruments. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

National Instruments Corporation Stock Quote
National Instruments Corporation
$38.85 (2.62%) $0.99

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.