NCI Earnings Preview

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NCI (NAS: NCIT) hasn't been able to establish an earnings trend, bouncing between beating and falling short of estimates during the past fiscal year. The company will unveil its latest earnings on Wednesday. NCI is a provider of information technology, engineering, and professional services and solutions to federal government agencies.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on NCI with 11 of 12 analysts rating it hold. Analysts don't like NCI as much as competitor TeleCommunication Systems overall. Three out of 10 analysts rate TeleCommunication Systems a buy compared to one of 12 for NCI. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $134.4 million in revenue this quarter. That would represent a decline of 20.4% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.23 per share. Estimates range from $0.22 to $0.24.

What our community says:
CAPS All-Stars are solidly backing the stock with 94.6% awarding it an outperform rating. The community at large concurs with the All-Stars with 96.4% granting it a rating of outperform. Fools have embraced NCI, though the message boards have been quiet lately with only 49 posts in the past 30 days. Even with a robust four out of five stars, NCI's CAPS rating falls a little short of the community's upbeat outlook.

Management:
NCI's income has fallen year over year by an average of 3.3% over the past five quarters. The company's gross margin shrank by 2.7 percentage points in the last quarter. Revenue rose 27.4% while cost of sales rose 31.3% to $145.7 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

9.6%

11.3%

11.5%

10.4%

Operating Margin

4.3%

6.5%

6.9%

6.0%

Net Margin

2.4%

3.8%

4.0%

3.6%

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

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At the time this article was published

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