The 10-second takeaway
For the quarter ended March 31 (Q2), Headwaters beat expectations on revenues and missed expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded slightly and GAAP loss per share dropped.
Margins grew across the board.
Headwaters logged revenue of $129.6 million. The four analysts polled by S&P Capital IQ wanted to see a top line of $114.0 million on the same basis. GAAP reported sales were 15% higher than the prior-year quarter's $113.2 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 -$0.29. The three earnings estimates compiled by S&P Capital IQ anticipated -$0.26 per share. GAAP EPS were -$0.34 for Q2 versus -$2.58 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 24.3%, 570 basis points better than the prior-year quarter. Operating margin was -0.8%, 2,310 basis points better than the prior-year quarter. Net margin was -15.9%, 12,200 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $164.7 million. On the bottom line, the average EPS estimate is $0.04.
Next year's average estimate for revenue is $612.5 million. The average EPS estimate is -$0.24.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 744 members out of 808 rating the stock outperform, and 64 members rating it underperform. Among 173 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 155 give Headwaters a green thumbs-up, and 18 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Headwaters is outperform, with an average price target of $4.56.
Over the decades, small-cap stocks, like Headwaters have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.
- Add Headwaters to My Watchlist.
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.