ADTRAN Beats Estimates but Has a Big Earnings Drop

Seth Jayson, The Motley Fool
Updated

ADTRAN (NAS: ADTN) reported earnings yesterday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), ADTRAN met expectations on revenues and beat expectations on earnings per share.

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


Margins shrank across the board.

Revenue details
ADTRAN booked revenue of $134.7 million. The 16 analysts polled by S&P Capital IQ expected to see revenue of $134.2 million on the same basis. GAAP reported sales were 19% lower than the prior-year quarter's $165.5 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
Non-GAAP EPS came in at $0.25. The 13 earnings estimates compiled by S&P Capital IQ forecast $0.23 per share on the same basis. GAAP EPS of $0.20 for Q1 were 62% lower than the prior-year quarter's $0.52 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 55.0%, 470 basis points worse than the prior-year quarter. Operating margin was 12.0%, 1,560 basis points worse than the prior-year quarter. Net margin was 9.6%, 1,110 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $167.2 million. On the bottom line, the average EPS estimate is $0.40.

Next year's average estimate for revenue is $676.3 million. The average EPS estimate is $1.65.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 167 members out of 187 rating the stock outperform, and 20 members rating it underperform. Among 53 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 49 give ADTRAN a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ADTRAN is outperform, with an average price target of $34.74.

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At the time thisarticle 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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