The 10-second takeaway
For the quarter ended March 31 (Q1), Netgear met expectations on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share contracted significantly. GAAP earnings per share contracted significantly.
Margins contracted across the board.
Netgear reported revenue of $293.4 million. The four analysts polled by S&P Capital IQ predicted revenue of $292.2 million on the same basis. GAAP reported sales were 9.9% lower than the prior-year quarter's $325.6 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 $0.50. The four earnings estimates compiled by S&P Capital IQ anticipated $0.49 per share. Non-GAAP EPS of $0.50 for Q1 were 32% lower than the prior-year quarter's $0.73 per share. GAAP EPS of $0.39 for Q1 were 40% lower than the prior-year quarter's $0.65 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 29.9%, 80 basis points worse than the prior-year quarter. Operating margin was 8.1%, 310 basis points worse than the prior-year quarter. Net margin was 5.2%, 250 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $350.7 million. On the bottom line, the average EPS estimate is $0.55.
Next year's average estimate for revenue is $1.41 billion. The average EPS estimate is $2.26.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 2,261 members out of 2,335 rating the stock outperform, and 74 members rating it underperform. Among 628 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 619 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 $38.57.
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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 recommends Netgear. 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.