DG FastChannel Earnings Preview

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DG FastChannel (NAS: DGIT) 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 Wednesday, Nov. 9. DG FastChannel and subsidiaries are providers of digital technology services that enable the electronic delivery of advertisements, syndicated programs, and video news releases to traditional broadcasters, online publishers, and other media outlets.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back DG FastChannel, with seven out of eight rating it a buy and the remainder rating it a hold. Analysts like DG FastChannel better than competitor Comcast overall. 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 $84.1 million in revenue this quarter. That would represent a rise of 47.7% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.05 per share. Estimates range from a loss of $0.03 to a profit of $0.18.

What our community says:
CAPS All-Stars are solidly backing the stock, with 94.6% granting it an outperform rating. The community at large backs the All-Stars, with 96.5% awarding it a rating of outperform. Fools are bullish on DG FastChannel and haven't been shy with their opinions lately, logging 106 posts in the past 30 days. DG FastChannel has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
DG FastChannel's profit has risen year over year by an average of 50.7% over the past five quarters. The company's gross margin shrank by 3.3 percentage points in the last quarter. Revenue rose 12.5% while cost of sales rose 24.6% to $22.9 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

66.2%

65.1%

68.9%

68.2%

Operating Margin

27.3%

32.6%

29.3%

31%

Net Margin

15.1%

19.6%

19.2%

17.4%

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At the time this article was published

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