The 10-second takeaway
For the quarter ended March 31 (Q1), EarthLink met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share dropped significantly.
Margins shrank across the board.
EarthLink chalked up revenue of $344.4 million. The five analysts polled by S&P Capital IQ looked for a top line of $343.2 million on the same basis. GAAP reported sales were 42% higher than the prior-year quarter's $243.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.09. The three earnings estimates compiled by S&P Capital IQ predicted $0.07 per share. GAAP EPS of $0.07 for Q1 were 53% lower than the prior-year quarter's $0.15 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 53.7%, 360 basis points worse than the prior-year quarter. Operating margin was 8.6%, 970 basis points worse than the prior-year quarter. Net margin was 2.1%, 460 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $339.3 million. On the bottom line, the average EPS estimate is $0.05.
Next year's average estimate for revenue is $1.35 billion. The average EPS estimate is $0.22.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 284 members out of 364 rating the stock outperform, and 80 members rating it underperform. Among 98 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 76 give EarthLink a green thumbs-up, and 22 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on EarthLink is buy, with an average price target of $12.28.
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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.