Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Knowles Corp. Are Soaring Today

By Timothy Green - Updated Mar 14, 2018 at 5:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The micro-acoustic specialist performed better than analysts were expecting, and new product launches during the second half should drive growth.

What: Shares of advanced micro-acoustic solutions provider Knowles Corp. (KN -0.57%) jumped on Tuesday following the company's first-quarter report. Knowles beat analyst estimates for both revenue and earnings, sending the stock higher despite a decline in revenue. At 11:40 a.m. ET Tuesday, shares of Knowles were up about 14%.

So what: Knowles reported quarterly revenue of $185.3 million, down 0.7% year over year but about $5.7 million higher than the average analyst estimate. The company pointed to better-than-expected sales in its mobile consumer electronics segment, with microphone shipments to North American and Korean handset customers driving the revenue beat. Revenue from the specialty components segment was in line with expectations. Knowles' results exclude the speaker and receiver business, which is currently being held for sale.

Rising stock chart superimposed over digital map of the world

Image source: Getty Images.

Knowles reported non-GAAP EPS of $0.08, down from $0.20 in the prior-year period but $0.05 higher than analysts were expecting. On a GAAP basis, the company reported a net loss from continuing operations of $0.14 per share, down from a gain of $0.06 per share. Higher operating costs were the main reason for the earnings decline, with R&D expense rising 60% year over year and selling and administrative costs rising 20%.

Now what: While revenue and profits slumped during the first quarter, Knowles CEO Jeffrey Niew expects business to pick up going forward. "Revenue for the first half of 2016 is tracking to our prior projections, with margins and EPS tracking slightly ahead of plan. We expect to see an acceleration of revenue and earnings in the second half of the year driven by new product launches, shipments of our intelligent audio solutions, and normal seasonal patterns."

Knowles doesn't expect much improvement during the second quarter, with revenue expected between $180 million and $200 million and non-GAAP EPS expected between $0.08 and $0.14. But the promise of growth in the second half, along with an across-the-board earnings beat, sent the stock soaring on Tuesday.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Knowles Corporation Stock Quote
Knowles Corporation
$17.55 (-0.57%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.