The 10-second takeaway
For the quarter ended April 30 (Q1), Mentor Graphics met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue contracted. Non-GAAP earnings per share contracted significantly. GAAP earnings per share shrank to zero.
Gross margins grew, operating margins shrank, net margins contracted.
Mentor Graphics notched revenue of $226.5 million. The seven analysts polled by S&P Capital IQ predicted net sales of $225.2 million on the same basis. GAAP reported sales were 8.6% lower than the prior-year quarter's $247.9 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 $0.10. The seven earnings estimates compiled by S&P Capital IQ anticipated $0.05 per share. Non-GAAP EPS of $0.10 for Q1 were 67% lower than the prior-year quarter's $0.30 per share. GAAP EPS dropped to zero from the prior-year quarter's $0.25.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 82.8%, 20 basis points better than the prior-year quarter. Operating margin was 3.3%, much worse than the prior-year quarter. Net margin was 0.1%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $244.9 million. On the bottom line, the average EPS estimate is $0.17.
Next year's average estimate for revenue is $1.16 billion. The average EPS estimate is $1.56.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 106 members out of 140 rating the stock outperform, and 34 members rating it underperform. Among 29 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 22 give Mentor Graphics a green thumbs-up, and seven give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Mentor Graphics is outperform, with an average price target of $20.86.
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