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New Relic Q2 Earnings: Can NYSE:NEWR Hit Its $0.01 EPS Target?

in EARNINGS/INVESTING IDEAS by

New Relic, Inc. (NYSE:NEWR) is scheduled to report Q2 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.01/share on revenue of $163.5 million. The consensus earnings per share (EPS) of $0.01/share is based on a poll of 16 analysts and represents a decline in eps of −95.1% over the same quarter last year, when the company reported earnings of $0.24/share.

The revenue forecast of $163.5 million based on a poll of 14 analysts implies a year-over-year (YoY) growth in revenue of 12.1%. Last year the company reported $145.8 million in revenue for the quarter.

Expected to report EPS contraction of −95.1% for Q2, 2021
Metric Expected Prior Year YoY Change
Revenue $163.53 $145.81 12.1%
EPS $0.01 $0.24 −95.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from New Relic, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2021 $0.03 $0.15 337.2% Beat
Q4, 2020 $0.03 $0.14 310.8% Beat
Q3, 2020 $0.12 $0.09 −27.7% Missed
Q2, 2020 $0.15 $0.24 62.4% Beat
Q1, 2020 $0.08 $0.19 132.6% Beat
Q4, 2019 $0.06 $0.13 117.6% Beat
Q3, 2019 $0.12 $0.19 52.2% Beat
Q2, 2019 $0.12 $0.20 72.1% 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 30, 2020, the stock price reacted by falling −21.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $71.43 $55.77 −21.9% Decline
May 14, 2020 $56.54 $63.89 13.0% Increase
February 4, 2020 $67.87 $62.93 −7.3% Decline
November 5, 2019 $65.60 $64.99 −0.9% 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 −2.98, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.98 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

New Relic, Inc. is currently trading at $61.22/share, down −2.0% for the day. The company is trading at approximately 83.4% of its 52-week high of $74.20/share. The company’s stock price is up 9.8% since the last earnings report and down −2.8% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 55.56 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:NEWR Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −35.63 and a forward P/E multiple of 362.31.

New Relic, Inc.’s current share price also implies a price-to-book (P/B) multiple of 9.39. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2021.Q1
Period End Date June 30, 2020
Stock Price (Current) $61.22
P/E Ratio −35.6x
P/E Ratio (Fwd) 362.3x
PEG Ratio 0.4
Total Debt / Total Capital 11.7%
Levered Free Cash Flow $41.842 million
EV / EBITDA −62.1x

Finbox

New Relic, Inc. is a mid-cap stock with a market capitalization of $3.762 billion and a total enterprise value of $3.434 billion. The company operates in the Information Technology sector and the Software industry.

New Relic, Inc., a software-as-a-service company, provides platform that companies use to build, develop, and operate their digital businesses worldwide. It offers a suite of products on its open and extensible cloud-based platform, New Relic One Platform, which enables users to collect, store, and analyze telemetry data flowing through and about their software. It provides prebuilt dashboards and visualizations, as well as the ability to search across data types, create customized dashboards, and build applications that can be shared and customized by other users. The company offers customers with software code to add to their applications and infrastructure; open data application performance interfaces, and software development kits, as well as open source connectors and technologies for customers, partners, and third-party developers to extend its platform into their products; cloud-based architecture and big data database; and New Relic Application Performance Monitoring, Mobile, Browser, Synthetics, Infrastructure, and Insights products for analyzing data. It also provides New Relic chart builder, dashboards, and programmability features that allow customers to use connected data to build visuals; New Relic Applied Intelligence to spot abnormal behavior across billions of pieces of data; and New Relic Alerts, which provides a centralized notification system. It sells its products through direct sales organizations, and online and offline sales. The company was founded in 2007 and is headquartered in San Francisco, California.

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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