Charm Communications Beats Expectations but Takes a Step Back Anyway

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Charm Communications (NAS: CHRM) reported earnings on May 16. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Charm Communications whiffed on revenue and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped significantly and GAAP earnings per share dropped significantly.


Gross margin expanded, operating margin contracted, and net margin shrank.

Revenue details
Charm Communications recorded revenue of $33.5 million. The one analyst polled by S&P Capital IQ anticipated a top line of $38.4 million on the same basis. GAAP reported sales were 46% lower than the prior-year quarter's $62.3 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.05. The one earnings estimate compiled by S&P Capital IQ forecast $0.01 per share. GAAP EPS of $0.01 for Q1 were 95% lower than the prior-year quarter's $0.20 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 29.3%, 550 basis points better than the prior-year quarter. Operating margin was 0.9%, 1,200 basis points worse than the prior-year quarter. Net margin was 1.6%, 1,100 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $36.0 million. On the bottom line, the average EPS estimate is $0.04.

Next year's average estimate for revenue is $205.4 million. The average EPS estimate is $0.67.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 12 members out of 17 rating the stock outperform, and five members rating it underperform. 

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Charm Communications is outperform, with an average price target of $12.75.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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