NetGear Earnings Preview

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NetGear (NAS: NTGR) beat estimates by $0.03 last quarter, and investors are hoping it can beat them again. The company will unveil its latest earnings Thursday. Netgear designs, develops, and markets networking products for home users and for small business.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back NetGear, with five of seven rating it a buy and the remainder rating it a hold. Analysts like NetGear better than competitor Arris Group overall. That rating hasn't budged in three months as analysts have remained steadfast in their opinion of the stock.
  • Revenue Forecasts: On average, analysts predict $293.7 million in revenue this quarter. That would represent a rise of 24.5% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.57 per share. Estimates range from $0.56 to $0.58.

What our community says:
CAPS All-Stars are solidly backing the stock with 98.6% granting it an "outperform" rating. The community at large agrees with the All-Stars with 96.9% giving it a rating of "outperform." Fools have embraced NetGear and haven't been shy with their opinions lately, logging 638 posts in the past 30 days. Even with a robust four out of five stars, NetGear's CAPS rating falls a little short of the community's upbeat outlook.

Management:
NetGear's profit has risen year over year by an average of 69.5% over the past five quarters. The company's gross margin shrank by 4.5 percentage points in the last quarter. Revenue rose 48.6% while cost of sales rose 58.9% to $200.9 million from a year earlier.

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.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

31%

31.5%

31.4%

32.1%

Operating Margin

9.5%

11.0%

9.7%

9.2%

Net Margin

7.1%

7.6%

5.3%

5.5%

One final thing: If you want to keep tabs on NetGear movements, and for more analysis on the company, make sure you add it to your watchlist.

Motley Fool newsletter services have recommended buying shares of Netgear.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

At the time this article was published

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