The 10-second takeaway
For the quarter ended July 1 (Q2), Netgear met expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue increased and GAAP earnings per share improved.
Margins shrank across the board.
Netgear booked revenue of $320.7 million. The eight analysts polled by S&P Capital IQ predicted a top line of $324.3 million on the same basis. GAAP reported sales were 10% higher than the prior-year quarter's $291.2 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 $0.64. The seven earnings estimates compiled by S&P Capital IQ forecast $0.68 per share. GAAP EPS of $0.56 for Q2 were 3.7% higher than the prior-year quarter's $0.54 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 29.5%, 170 basis points worse than the prior-year quarter. Operating margin was 9.7%, 60 basis points worse than the prior-year quarter. Net margin was 6.7%, 40 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $344.5 million. On the bottom line, the average EPS estimate is $0.73.
Next year's average estimate for revenue is $1.36 billion. The average EPS estimate is $2.86.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 2,284 members out of 2,356 rating the stock outperform, and 72 members rating it underperform. Among 634 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 625 give Netgear a green thumbs-up, and nine give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Netgear is outperform, with an average price target of $42.63.
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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 the co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Netgear. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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