Investors hope Ceradyne (Nasdaq: CRDN) will top analyst estimates once again after beating predictions by $0.27 in the previous quarter. The company will unveil its latest earnings on Tuesday, July 26. Ceradyne develops, manufactures, and markets advanced technical ceramic products, ceramic powders, and components for defense, industrial, automotive/diesel, and commercial applications.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Ceradyne, with five of eight analysts rating it a hold. Analysts don't like Ceradyne as much as competitor General Dynamics overall. Seventeen out of 23 rate General Dynamics a buy, compared with three of eight for Ceradyne. While analysts still rate the stock a hold, they are a little more optimistic about it compared with three months ago.
  • Revenue forecasts: On average, analysts predict $148.3 million in revenue this quarter. That would represent a rise of 47.6% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.85 per share. Estimates range from $0.47 to $0.98.

What our community says:
CAPS All-Stars are solidly behind the stock, with 99.3% granting it an "outperform" rating. The community at large agrees with the All-Stars, with 96.9% giving it a rating of "outperform." Fools are bullish on Ceradyne and haven't been shy with their opinions lately, logging 458 posts in the past 30 days. Ceradyne has a bullish CAPS rating of five out of five stars that is about on par with the Fool community's assessment.

Ceradyne's profit has risen year over year by an average of 50%. The company's revenue has now risen for two straight quarters. The company raised its gross margin by 15.6 percentage points in the last quarter. Revenue rose 36.4% while cost of sales rose 8.7% to $92 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

Quarter Q1 Q4 Q3 Q2
Gross Margin 38.7% 32.8% 25.7% 25.7%
Operating Margin 23.7% 6.9% 7.1% 7%
Net Margin 15.7% 13.1% 4.9% 6.5%
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