Ceradyne Earnings Preview

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Investors braced for a bumpy ride ahead of Ceradyne's (NAS: CRDN) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Thursday, Feb. 16. Ceradyne develops, manufactures, and markets advanced technical ceramic products, ceramic powders, and components for defense, industrial, automotive/diesel, and commercial applications.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Ceradyne with four of six analysts rating it hold. 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 $131.9 million in revenue this quarter. That would represent a rise of 31% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.62 per share. Estimates range from $0.48 to $0.72.

What our community says:
CAPS All-Stars are solidly backing the stock, with 98.6% giving it an "outperform" rating. The greater community concurs with the All-Stars, as 97.1% give it a rating of "outperform." Fools are bullish on Ceradyne and haven't been shy with their opinions lately, logging 460 posts in the past 30 days. Ceradyne has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Ceradyne's profit has risen year-over-year by an average of more than threefold over the past five quarters. Revenue has now gone up for three straight quarters. The company raised its gross margin by 10.6 percentage points in the last quarter. Revenue rose 61.3% while cost of sales rose 38.3% to $94.2 million from a year earlier.

Now, a look at how efficient management has been at running the business. Margins illustrate how efficiently a company captures portions of sales dollars. Ceradyne has seen increasing gross margins year-over-year for the last four quarters. Gross margins reflect the total sales revenue retained after costs. See how Ceradyne has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

36.3%

36.4%

38.7%

32.8%

Operating Margin

20.8%

20.3%

23.7%

6.9%

Net Margin

13.8%

13.2%

15.7%

13.1%

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