Kornit Digital Q3 Earnings: Is KRNT Expensive at 154.0x Price/EPS?

in EARNINGS/INVESTING IDEAS by

Kornit Digital Ltd. (NASDAQGS:KRNT) is scheduled to report Q3 earnings results on November 18, 2019. The company is expected to report earnings of $0.18/share on revenue of $48.8 million. The consensus earnings per share (EPS) of $0.18/share is based on a poll of 7 analysts and represents a growth of 38.5% over the same quarter last year when the company reported earnings of $0.13/share.

The revenue forecast of $48.8 million based on a poll of 5 analysts implies a year-over-year (YoY) growth of 29.8%. Last year the company reported $37.591 million in revenue for the quarter.

Expected to report EPS growth of $0.05/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $48.80 $37.59 29.8%
EPS $0.18 $0.13 38.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2019 $0.13 $0.08 -38.5% Missed
Q1, 2019 $0.07 $0.03 -57.1% Missed
Q4, 2018 $0.12 $0.08 -33.3% Missed
Q3, 2018 $0.12 $0.13 8.6% Beat
Q2, 2018 $0.08 $0.09 12.5% Beat
Q1, 2018 -$0.02 $0.06 NM Beat
Q4, 2017 $0.05 $0.04 -20.0% Missed
Q3, 2017 $0.02 $0.05 150.0% Beat

What are your expectations from Kornit Digital for this earnings this quarter? Let us know in the comments!

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by falling by -9.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-06 $30.30 $27.29 -9.9% Decline
2019-05-13 $25.86 $26.02 0.6% Increase
2019-02-12 $21.84 $22.24 1.8% Increase
2018-11-12 $20.06 $21.40 6.7% Increase

Fundamentals And Technical Analysis

Kornit Digital is currently trading at $32.83/share, down -4% for the day ahead of earnings. The company is trading at around 95% of its 52-week high of $34.77/share. The company’s stock price is up 20% since the last earnings report. The company’s 14 Day Relative Price Index (RSI) of 62.12 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30. The image below summarize the company’s quarterly financial performance:

Kornit Digital Financials

The current share price implies a price-to-earnings (P/E) multiple of 154.0x and a forward P/E multiple of 70.1x.

Kornit Digital’s current share price also implies a price-to-book (P/B) multiple of 4.4x. The following table summarizes some other key fundamental ratios:

Data as of November 17, 2019
Metric Value
Last Fiscal Period FY2019.Q2
Period End Date June 30, 2019
Stock Price (Current) $34.22
P/E Ratio 154.0x
P/E Ratio (Fwd) 70.1x
PEG Ratio 1.0
Total Debt to Capital (%) 1.1%
Levered Free Cash Flow $14.734 million
Enterprise Value / EBITDA 164.4x

Company Profile: Kornit Digital Ltd.

Kornit Digital Ltd. is a small-cap stock with a market capitalization of $1.382 billion and a total enterprise value of $1.185 billion. The company operates in the Industrials sector and Machinery industry.

Kornit Digital Ltd. develops, designs, and markets solutions for the fashion, apparel, and home decor segments of printed textile industry. The company’s solutions include digital printing systems, ink and other consumables, associated software, and value added services.

The company offers direct-to-garment printing systems from smaller industrial operators to mass producers; NeoPigment ink and other consumables; QuickP designer software; and value added services, such as maintenance and support, and professional services. The company serves decorators, online businesses, brand owners, and contract printers. Kornit Digital, Ltd. was founded in 2002 and is headquartered in Rosh-Ha`Ayin, Israel.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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