The 10-second takeaway
For the quarter ended Dec. 25 (Q2), Cree missed slightly on revenues and missed on earnings per share.
Compared to the prior-year quarter, revenue grew significantly, and earnings per share shrank significantly.
Margins dropped across the board.
Cree reported revenue of $304 million. The 28 analysts polled by S&P Capital IQ predicted a top line of $310 million. Sales were 18% higher than the prior-year quarter's $257 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.25. The 28 earnings estimates compiled by S&P Capital IQ averaged $0.26 per share on the same basis. GAAP EPS of $0.10 for Q2 were 78% lower than the prior-year quarter's $0.45 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 34.7%, 1,240 basis points worse than the prior-year quarter. Operating margin was 4.3%, 1,740 basis points worse than the prior-year quarter. Net margin was 4.0%, 1,540 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $300 million. On the bottom line, the average EPS estimate is $0.21.
Next year's average estimate for revenue is $1.2 billion. The average EPS estimate is $.98.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,114 members out of 1,204 rating the stock outperform, and 90 members rating it underperform. Among 251 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 235 give Cree a green thumbs-up, and 16 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cree is outperform, with an average price target of $35.09.
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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.