What happened
Reporting fourth-quarter 2021 earnings this morning, Itron (ITRI 0.10%) failed to meet analysts' revenue expectations. But that wasn't the only disappointment for the provider of smart energy solutions. Investors seem to be heading for the exits due to a variety of other details found in the financials.
As of 9:53 a.m. ET, Itron's stock is down 14.3%.
So what
While analysts had expected Itron to book sales of $505.8 million in Q4 2021, the company came up short, reporting $485.6 million on the top line. The failure to meet Wall Street's estimate isn't the only reason investors are upset; the company's quarterly revenue represented an 8% year-over-year decrease. In addition, the company suffered a contraction in its gross margin for the quarter. Whereas Itron generated a 28.3% gross margin in Q4 2020, its gross margin in the recently completed quarter was 330 basis points lower at 25%.
A cursory glance at the bottom line may hint at a reason for investors to celebrate. Itron reported adjusted earnings per share of $0.75, surpassing analysts' expectations that it would report adjusted EPS of $0.19. The problem, however, is that the company, in its press release, attributed this to "to a non-GAAP tax benefit driven by the impact of certain transfers of business activities and assets" -- not a fundamental improvement in the company's performance, which would've been a more auspicious cause.
Image source: Getty Images.
Now what
Unimpressed with the company's recent performance, investors are likely also not jumping for joy over management forecasting nominal revenue growth in 2022. After reporting sales of $2 billion in 2021, Itron projects 2022 revenue of $2 billion to $2.1 billion. For investors looking to gain exposure to the burgeoning smart energy market, it seems like Itron may be a stock to watch from the sidelines.
