Electronics test equipment designer Tektronix (NYSE:TEK) is set to report earnings this afternoon for Q1 2007. We're here to give you an idea of what to expect from tonight's announcement.

What analysts say:

  • Buy, sell, or waffle? Five analysts follow Tektronix, and four of them want us to buy the stock. The fifth one issues a more restrained "hold" recommendation.

  • Revenues. $263.5 million of sales would satisfy the average analyst this time, representing a 12% improvement over last year's $235 million.

  • Earnings. The analysts are remarkably consistent here: No forecast strayed more than one penny away from the consensus of $0.33 per share. That's up from $0.25 per share a year ago.

What management says:
Most of us would probably have a hard time working up excitement over digital testing gear, but not these guys. The company's press releases proudly announce "the world's most popular oscilloscopes," the "market-changing" power of digital radio frequency spectrum analysis, and Tektronix's long history in the field. There's also a heavy emphasis on IPTV technology -- helping telecoms and cable operators design their next-generation television systems on an Internet backbone.

Heck, all of that is almost enough to make me excited about signal testing. So management talks a big game, and implies great things ahead at almost every turn. Let's see how that enthusiasm meshes with reality.

What management does:
Apart from a bottom-line dip at this time last year, trailing margins look very stable. They're certainly not showing any consistent growth, in spite of all the flowery language from the top brass.

Margins %

2/05

5/05

8/05

11/05

2/06

5/06

Gross

59.4

59.8

59.5

59.5

59.7

59.8

Op.

15.5

14.9

12.6

11.9

12.5

13.0

Net

8.4

7.9

5.8

8.2

8.1

8.9
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
I know that IPTV is a very promising market, and other companies are looking to make a ton of money from that sea change. But Tektronix doesn't seem to have figured out how to latch on to that trend yet, and the promise inherent in replacing old-style analog RF analyzers with the company's digital ones hasn't yet materialized, either.

This is another case of looking for business development news in tonight's release and conference call, rather than staring at the numbers. How are the order pipelines shaping up? Is anybody buying those fancy new instruments? These are the things I want to know. The company has delivered positive earnings surprises four quarters in a row, and I don't see why tonight should be any different. Just wake me up when the Q&A session starts.

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