NETGEAR, Inc. (NasdaqGS:NTGR) is scheduled to report Q3 earnings results after markets close for trading on October 21, 2020.
The company is expected to report earnings of $0.66/share on revenue of $313.5 million. The consensus earnings per share (EPS) of $0.66/share is based on a poll of 4 analysts and represents a growth in eps of 1.1% over the same quarter last year, when the company reported earnings of $0.65/share.
The revenue forecast of $313.5 million based on a poll of 4 analysts implies a year-over-year (YoY) growth in revenue of 17.9%. Last year the company reported $265.9 million in revenue for the quarter.
| Metric | Expected | Prior Year | YoY Change |
|---|---|---|---|
| Revenue | $313.51 | $265.86 | 17.9% |
| EPS | $0.66 | $0.65 | 1.1% |
Earnings Call Trends
Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.
What are your expectations from NETGEAR, Inc. for earnings this quarter? Let us know in the comments!
| Quarter | Expected | Reported | Surprise | Result |
|---|---|---|---|---|
| Q2, 2020 | $0.22 | $0.54 | 140.5% | Beat |
| Q1, 2020 | $0.18 | $0.21 | 18.6% | Beat |
| Q4, 2019 | $0.29 | $0.34 | 15.6% | Beat |
| Q3, 2019 | $0.60 | $0.65 | 7.4% | Beat |
| Q2, 2019 | $0.25 | $0.28 | 12.0% | Beat |
| Q1, 2019 | $0.49 | $0.60 | 22.7% | Beat |
| Q4, 2018 | $0.33 | $0.68 | 103.6% | Beat |
| Q3, 2018 | $0.47 | $0.76 | 62.3% | Beat |
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 28, 2020, the stock price reacted by increasing 5.4%.
| Report Date | Price Day Prior | Price Next Day | Change % | Result |
|---|---|---|---|---|
| July 22, 2020 | $30.17 | $31.79 | 5.4% | Increase |
| April 22, 2020 | $23.53 | $21.66 | −7.9% | Decline |
| February 5, 2020 | $25.84 | $24.79 | −4.1% | Decline |
| October 23, 2019 | $31.95 | $26.03 | −18.5% | Decline |
The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.75, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.75 implies a 0.3% chance of earnings manipulation.
Fundamentals And Technical Analysis
NETGEAR, Inc. is currently trading at $34.22/share, up 2.6% for the day. The company is trading at approximately 96.5% of its 52-week high of $34.93/share. The company’s stock price is up 7.6% since the last earnings report and up 1.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 58.88 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.
The current share price implies a price-to-earnings (P/E) multiple of 73.26 and a forward P/E multiple of 15.72.
NETGEAR, Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.68. The following table summarizes some other key fundamental ratios:
| Metric | Value |
|---|---|
| Last Reported Fiscal Period Key | FY2020.Q2 |
| Period End Date | June 28, 2020 |
| Stock Price (Current) | $34.22 |
| P/E Ratio | 73.3x |
| P/E Ratio (Fwd) | 15.7x |
| PEG Ratio | 0.3 |
| Total Debt / Total Capital | 3.5% |
| Levered Free Cash Flow | $107.2 million |
| EV / EBITDA | 18.6x |
NETGEAR, Inc. is a small-cap stock with a market capitalization of $997.3 million and a total enterprise value of $775.4 million. The company operates in the Information Technology sector and the Communications Equipment industry.
NETGEAR, Inc. designs, develops, and markets networking and Internet connected products for consumers, businesses, and service providers. It operates in two segments, Connected Home, and Small and Medium Business. The company offers smart home/connected home/broadband access products, such as broadband modems, WiFi gateways, WiFi hotspots, WiFi routers and home WiFi systems, WiFi range extenders, Powerline adapters and bridges, WiFi network adapters, and digital canvasses; and value added service offerings, including technical support, parental controls, and cybersecurity protection. It also provides Ethernet switches, wireless controllers and access points, unified storage products, and Internet security appliances for small and medium-sized businesses. The company markets and sells its products through traditional retailers, online retailers, wholesale distributors, direct market resellers, value-added resellers, and broadband service providers in the Americas, Europe, the Middle-East, Africa, and the Asia Pacific. NETGEAR, Inc. was founded in 1996 and is headquartered in San Jose, California.
