Linear Technology Beats Expectations but Takes a Step Back Anyway

Seth Jayson, The Motley Fool
Updated

Linear Technology (NAS: LLTC) reported earnings on April 17. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended April 1 (Q3), Linear Technology met expectations on revenues and beat slightly on earnings per share.

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


Margins dropped across the board.

Revenue details
Linear Technology booked revenue of $312.4 million. The 22 analysts polled by S&P Capital IQ anticipated revenue of $312.4 million on the same basis. GAAP reported sales were 12% lower than the prior-year quarter's $353.2 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 $0.44. The 18 earnings estimates compiled by S&P Capital IQ forecast $0.43 per share on the same basis. GAAP EPS of $0.42 for Q3 were 31% lower than the prior-year quarter's $0.61 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 75.1%, 250 basis points worse than the prior-year quarter. Operating margin was 44.8%, 590 basis points worse than the prior-year quarter. Net margin was 31.5%, 860 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $329.1 million. On the bottom line, the average EPS estimate is $0.47.

Next year's average estimate for revenue is $1.27 billion. The average EPS estimate is $1.77.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 724 members out of 758 rating the stock outperform, and 34 members rating it underperform. Among 285 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 279 give Linear Technology a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Linear Technology is outperform, with an average price target of $34.60.

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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. Motley Fool newsletter services have recommended buying shares of Linear Technology. 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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