The 10-second takeaway
For the quarter ended Sep. 30 (Q3), EarthLink met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank and GAAP earnings per share dropped significantly.
Margins shrank across the board.
EarthLink booked revenue of $334.8 million. The four analysts polled by S&P Capital IQ anticipated a top line of $333.7 million on the same basis. GAAP reported sales were 6.3% lower than the prior-year quarter's $357.3 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 $0.07. The three earnings estimates compiled by S&P Capital IQ predicted $0.05 per share. GAAP EPS of $0.01 for Q3 were 86% lower than the prior-year quarter's $0.07 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 52.8%, 200 basis points worse than the prior-year quarter. Operating margin was 6.3%, 510 basis points worse than the prior-year quarter. Net margin was 0.4%, 170 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $328.9 million. On the bottom line, the average EPS estimate is $0.02.
Next year's average estimate for revenue is $1.34 billion. The average EPS estimate is $0.19.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 281 members out of 361 rating the stock outperform, and 80 members rating it underperform. Among 95 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 71 give EarthLink a green thumbs-up, and 24 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on EarthLink is outperform, with an average price target of $9.50.
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