NetScout Systems Earnings Preview

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NetScout Systems (NAS: NTCT) didn't hit the Street's expectations last quarter, but investors hope that it will rebound this quarter. The company will unveil its latest earnings on Thursday, Oct. 20. NetScout Systems designs, develops, manufactures, markets, sells, and supports unified service delivery management, service assurance and application, and network performance management solutions.

What analysts say:

  • Buy, sell, or hold?: Half of analysts think investors should stand pat on NetScout Systems while the remaining half rate the stock as a buy. Analysts like NetScout Systems better than competitor Blue Coat Systems overall. One out of 14 analysts rate Blue Coat Systems a buy compared to six of 12 for NetScout Systems. While analysts still rate the stock a moderate buy, they are a little more optimistic about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $69.9 million in revenue this quarter. That would represent a rise of 0.6% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.17 per share. Estimates range from $0.13 to $0.21.

What our community says:
CAPS All-Stars are solidly backing the stock, with 96.7% assigning it an "outperform" rating. The community at large backs the All-Stars, with 91.9% awarding it a rating of "outperform." Fools are gung-ho about NetScout Systems, though the message boards have been quiet lately with only 54 posts in the past 30 days. Even with a robust four out of five stars, NetScout Systems' CAPS rating falls a little short of the community's upbeat outlook.

Management:
NetScout Systems' profit has risen year over year by an average of 8.2% over the past five quarters. A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

QuarterQ1Q4Q3Q2
Gross Margin78.0%79.0%78.9%79.4%
Operating Margin6.8%21.7%21.3%19.2%
Net Margin3.8%13.8%14.5%11.9%
One final thing: If you want to keep tabs on NetScout Systems movements, and for more analysis on the company, make sure you add it to your Watchlist.

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