The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Mellanox Technologies beat expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue increased significantly and GAAP earnings per share expanded significantly.
Margins increased across the board.
Mellanox Technologies logged revenue of $156.5 million. The 15 analysts polled by S&P Capital IQ predicted net sales of $153.0 million on the same basis. GAAP reported sales were much higher than the prior-year quarter's $68.2 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 $1.37. The 15 earnings estimates compiled by S&P Capital IQ anticipated $1.12 per share. GAAP EPS of $1.09 for Q3 were much higher than the prior-year quarter's $0.13 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 69.1%, 460 basis points better than the prior-year quarter. Operating margin was 31.4%, 2,320 basis points better than the prior-year quarter. Net margin was 30.9%, 2,380 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $153.5 million. On the bottom line, the average EPS estimate is $1.06.
Next year's average estimate for revenue is $529.7 million. The average EPS estimate is $3.73.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 192 members out of 218 rating the stock outperform, and 26 members rating it underperform. Among 60 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 52 give Mellanox Technologies a green thumbs-up, and eight give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Mellanox Technologies is outperform, with an average price target of $122.38.
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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. The Motley Fool has no positions in the stocks mentioned above. 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.