QLogic Earnings Preview

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QLogic (NAS: QLGC) will try to beat its earnings estimates for the fifth consecutive quarter. The company will unveil its latest earnings on Thursday, Jan. 26. QLogic is a designer and supplier of network infrastructure products that enhance, manage and support the transmission of data from computer servers to storage systems and from computer servers to other servers.

What analysts say:

  • Buy, sell, or hold?: Analysts are bullish on QLogic as four analysts rate it as a buy and only three analysts rate it as a sell. Analysts like QLogic better than competitor PMC-Sierra overall. That rating hasn't budged in three months as analysts have remained steady in their opinion of the stock.
  • Revenue Forecasts: On average, analysts predict $150.3 million in revenue this quarter. That would represent a decline of 3.5% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.25 per share. Estimates range from $0.23 to $0.26.

What our community says:
CAPS All-Stars are solidly backing the stock with 98.7% assigning it an "outperform" rating. The community at large agrees with the All-Stars with 93.7% giving it a rating of "outperform." Fools have embraced QLogic, though the message boards have been quiet lately with only 70 posts in the past 30 days. Despite the majority sentiment in favor of QLogic, the stock has a middling CAPS rating of three out of five stars.

Management:
QLogic's income has fallen year over year by an average of more than twofold over the past five quarters. Revenue has now gone up for three straight quarters.

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. 

QuarterQ2Q1Q4Q3
Gross Margin66.0%66.5%66.6%66.0%
Operating Margin21.3%21.5%23.6%26.0%
Net Margin19.1%21.4%21.9%32.3%

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