The 10-second takeaway
For the quarter ended Nov. 30 (Q4), Xyratex beat expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank slightly, and earnings per share dropped significantly.
Gross margins grew, operating margins expanded, and net margins dropped.
Xyratex reported revenue of $388 million. The five analysts polled by S&P Capital IQ predicted revenue of $362 million. Sales were 2.3% lower than the prior-year quarter's $397 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.73. The five earnings estimates compiled by S&P Capital IQ averaged $0.34 per share on the same basis. GAAP EPS of $0.65 for Q4 were 36% lower than the prior-year quarter's $1.02 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 17.7%, 160 basis points better than the prior-year quarter. Operating margin was 6.7%, 240 basis points better than the prior-year quarter. Net margin was 4.8%, 330 basis points worse than the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods.
What does the future hold?
Next quarter's average estimate for revenue is $317 million. On the bottom line, the average EPS estimate is $0.27.
Next year's average estimate for revenue is $1.4 billion. The average EPS estimate is $1.78.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 265 members out of 285 rating the stock outperform, and 20 members rating it underperform. Among 76 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 70 give Xyratex a green thumbs-up, and six give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Xyratex is outperform, with an average price target of $12.40.
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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. 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.