FARO Technologies Earnings Preview

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FARO Technologies (NAS: FARO) 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 Monday. Faro Technologies designs, develops, manufactures, markets, and supports portable, software-driven, 3-D measurement and imaging systems used in a range of manufacturing, industrial, building construction, and forensic applications.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back FARO Technologies as a buy. But with 60% of analysts rating it a buy, FARO Technologies is still below the mean analyst rating of its nearest 10 competitors, which average 75% buys. Analysts don't like FARO Technologies as much as competitor MTS Systems overall. Two out of three analysts rate MTS Systems a buy compared to three of five for FARO Technologies. 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 $74 million in revenue this quarter. That would represent a rise of 26.4% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.48 per share. Estimates range from $0.36 to $0.61.

What our community says:
CAPS All-Stars are strongly backing the stock, with 95.5% awarding it an outperform rating. The greater community agrees with the All-Stars, as 93.5% give it a rating of outperform. Fools are bullish on FARO Technologies and haven't been shy with their opinions lately, logging 123 posts in the past 30 days. FARO Technologies' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
FARO Technologies' income has fallen year-over-year by an average of more than twofold over the past five quarters. The company's gross margin shrank by 2.1 percentage points in the last quarter. Revenue rose 43.1% while cost of sales rose 50.3% to $28.4 million from a year earlier.

Now let's get some insight into how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. For four quarters in a row, the company has seen increases in net margins year-over-year. Net margins reflect what percentage of revenue becomes profit. See how FARO Technologies has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

56.1%

56.1%

57.6%

59.0%

Operating Margin

15.4%

9.6%

8.1%

10.6%

Net Margin

9.9%

7.1%

6.2%

8.3%

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

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Earnings estimates provided by Zacks.

At the time this article was published

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