The 10-second takeaway
For the quarter ended May 31 (Q2), Xyratex beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped significantly. Non-GAAP earnings per share shrank significantly. GAAP earnings per share dropped significantly.
Gross margins expanded, operating margins dropped, net margins dropped.
Xyratex logged revenue of $216.2 million. The three analysts polled by S&P Capital IQ expected to see revenue of $203.2 million on the same basis. GAAP reported sales were 33% lower than the prior-year quarter's $322.1 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 three earnings estimates compiled by S&P Capital IQ forecast -$0.05 per share. Non-GAAP EPS of $0.10 for Q2 were 69% lower than the prior-year quarter's $0.32 per share. GAAP EPS of $0.11 for Q2 were 54% lower than the prior-year quarter's $0.24 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 22.0%, 550 basis points better than the prior-year quarter. Operating margin was 2.0%, 50 basis points worse than the prior-year quarter. Net margin was 1.4%, 80 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $223.1 million. On the bottom line, the average EPS estimate is $0.13.
Next year's average estimate for revenue is $861.1 million. The average EPS estimate is $0.08.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 256 members out of 275 rating the stock outperform, and 19 members rating it underperform. Among 71 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 65 give Xyratex a green thumbs-up, and six give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Xyratex is outperform, with an average price target of $14.00.
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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 position in any of the stocks mentioned. 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.