The 10-second takeaway
For the quarter ended Jan. 31 (Q4), Mentor Graphics beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved, and GAAP earnings per share improved significantly.
Gross margins dropped, operating margins expanded, and net margins increased.
Mentor Graphics reported revenue of $320.4 million. The six analysts polled by S&P Capital IQ foresaw sales of $316.4 million on the same basis. GAAP reported sales were 4.2% higher than the prior-year quarter's $307.3 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
Non-GAAP EPS came in at $0.58. The six earnings estimates compiled by S&P Capital IQ forecast $0.50 per share on the same basis. GAAP EPS of $0.52 for Q4 were 16% higher than the prior-year quarter's $0.45 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 86.7%, 130 basis points worse than the prior-year quarter. Operating margin was 22.3%, 300 basis points better than the prior-year quarter. Net margin was 18%, 150 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $232.2 million. On the bottom line, the average EPS estimate is $0.14.
Next year's average estimate for revenue is $1.07 billion. The average EPS estimate is $1.25.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 101 members rating the stock outperform and 29 members rating it underperform. Among 25 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 21 give Mentor Graphics a green thumbs-up, and four give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Mentor Graphics is buy, with an average price target of $15.50.
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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.