Please ensure Javascript is enabled for purposes of website accessibility

Why Cray Inc. Stock Jumped Wednesday

By Daniel Sparks - Updated May 2, 2018 at 12:46PM

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

Revenue crushed expectations. Here's a look at the surprising first quarter.

What happened

Shares of supercomputer-systems builder Cray (CRAY) jumped on Wednesday, rising as much as 17.5%. The stock's gain follows Cray's first-quarter update on Tuesday. Shares are trading about 13.3% higher at the time of this writing.

Investor optimism toward the stock on Wednesday is likely due to Cray's narrower-than-expected loss per share and higher-than-expected revenue for its first quarter. Both metrics were ahead of the consensus analyst estimate for the period.

A stock chart showing a stock price moving higher

Image source: Getty Images.

So what

Cray reported a first-quarter adjusted loss per share of $0.53, narrower than its adjusted loss per share of $0.71 in the year-ago period and better than a consensus analyst estimate of a $0.57 adjusted loss. 

Revenue for the period was $79.6 billion, up 35% from revenue of $59 million in the year-ago quarter. Cray's top line crushed analyst estimates. Analysts were expecting first-quarter revenue of just $50 million.

Cray's strong revenue growth helped offset the company's narrowing gross profit margin. On both a GAAP and non-GAAP basis, the company's gross profit margin narrowed from 40% in the year-ago quarter to 34% in the first quarter of 2018.

CEO Peter Ungaro said Cray's first quarter marked "a strong start to the year." Specifically, Ungaro said the period represented one of its "strongest bookings quarters in several years."

Now what

Looking ahead, Ungaro said Cray believes its strong bookings are "another early sign that our target market is continuing to strengthen."

Ungaro explained: "Among these new awards, we were selected by the Japanese National Institutes for Quantum and Radiological Science and Technology to deliver our latest generation XC supercomputer to serve as their new flagship system. These are good examples of our strong competitive position, which is key for us to drive growth in 2018 and beyond."

For the full year, Cray expects revenue to rise 10% to 15% compared to 2017. For its second quarter, management forecast revenue of about $110 million -- above the current consensus analyst estimate of $86 million for the period.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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

Cray Inc. Stock Quote
Cray Inc.

*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 08/14/2022.

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.