We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Juniper (JNPR) Beats Q1 Earnings on Strong Cloud Growth
Read MoreHide Full Article
Juniper Networks Inc. (JNPR - Free Report) reported first-quarter 2017 non-GAAP earnings (including share-based compensation and share-based payroll tax expense) of 34 cents per share, beating the Zacks Consensus Estimate by three cents.
Excluding these items, earnings increased 24.3% from the year-ago quarter to 46 cents per share. The growth was driven by solid revenues, which increased 11.2% year over year to $1.22 billion, comfortably surpassing the Zacks Consensus Estimate and its own expectation of $1.20 billion (+/- $30 million). The year-over-year revenue growth was much better-than management’s expectation of 9%.
Shares increased more than 3% in after-hour trading following the earnings release. We note that the company has outperformed the Zacks Wireless Equipment industry on a year-to-date basis. While the stock gained 1.9%, the industry lost 6.1%.
Management noted that pricing pressure, unfavorable product and customer mix along with higher DRAM memory prices will continue to hurt gross margin in the rest of 2017. Moreover lumpy router revenue growth is also a concern.
Despite these challenges, we believe that Juniper has significant growth opportunity based on the strong adoption of its cloud products (particularly in data center), which jumped 25% from the year-ago quarter. Notably, four out of top 10 customers were cloud providers in the reported quarter.
Moreover, strong demand for its switching product (the QFX line) will drive top-line growth. Further, stringent cost control and shareholder friendly initiatives will aid the stock to maintain upside against the broader market in 2017.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Product revenues (67.9% of total revenue) increased 10.1% on a year-over-year basis to $828.9 million. On the other hand, services revenues (32.1% of total revenue) climbed 13.7% to $392.1 million.
The networking solutions provider witnessed year-over-year revenue growth in the Switching product category, which surged 37.7% to $241.6 million. Routing category revenues also inched up 3.5% year over year to $521.6 million. However, Security revenues declined 10.5% to $65.7 million.
Juniper noted strong demand for its QFX family of products, revenues from which soared 50% on a year-over-year basis. Moreover, PTX had another strong quarter while MX revenue also increased.
Geographically, the company registered a year-over-year increase in revenues from America (up 13.3%) and Asia Pacific (up 22%), while revenues from EMEA were almost flat.
Operational Details
Adjusted gross margin contracted 120 basis points (bps) year over year to 62%, primarily due to unfavorable product (down 200 bps) and customer mix. The company expanded footprint into certain strategic APAC Telecom and Cloud customers, which are low margin business. Gross margin was close to management’s guidance of 62.5% (+/- 0.5%).
As percentage of revenues, general & administrative (G&A), sales & marketing (S&M) and research & development (R&D) expenses decreased 20 bps, 110 bps and 170 bps, respectively on a year-over-year basis.
As a result, total operating expense (including stock-based compensation and share-based payroll tax expense) as percentage of revenues declined 300 bps to 46.8%.
In dollar terms, total operating expense (excluding stock-based compensation and share-based payroll tax expense) increased 4.4% to $509.1 million, lower than guidance of $515 million (+/- $5 million).
Hence, operating margin (including stock-based compensation and share-based payroll tax expense) expanded 110 bps to 15.3% in the reported quarter.
Excluding stock-based compensation and share-based payroll tax expense, operating margin expanded 150 bps to 20.8%, which beat management’s guidance of almost 19.5%.
Cash Flow/Share Buyback
Total cash, cash equivalents, and short-term investments as of Mar 31, 2017 were $2.98 billion, as compared with $3.66 billion as of Dec 31, 2016. Juniper’s net cash flows from operations were $545.3 million, as compared with $334 million in fourth-quarter 2016.
Juniper repurchased $125 million of shares and paid $38 million in dividends in the reported quarter.
Guidance
Juniper anticipates revenues of approximately $1.28 billion (+/- $30 million) for second-quarter 2017, reflecting almost 5% growth, which falls within management’s long-term revenue growth expectation of 3–6%.
Non-GAAP gross margin is projected to be around 62.5% (+/- 0.5%). The company expects non-GAAP operating expenses of $500 million (+/- $5 million), and non-GAAP operating margin of almost 23.5%.
Non-GAAP earnings are anticipated to be 54 cents per share (+/- 3 cents). The Zacks Consensus Estimate (including stock-based compensation expense) is currently pegged at 42 cents.
Juniper still expects revenues to grow in 2017, driven by a differentiated product portfolio and strong adoption of cloud products. For the rest of 2017, management expects non-GAAP gross margin to be similar to the first-quarter figure (lower than long-term expectation of 63%), due to unfavorable customer and product mix along with higher cost for certain memory components.
The company expects to achieve long-term operating expense as percentage of revenue guidance of 39% in 2017.
Management expects continued strong cash flow generation and plans to return approximately 50% of free cash flow to shareholders.
Zacks Rank & Key Picks
Currently, Juniper carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader technology sector are PC-Tel Inc. , DragonWave and Motorola Solutions (MSI - Free Report) . While PC-Tel sports a Zacks Rank #1 (Strong Buy), both DragonWave and Motorola carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Motorola, PC-Tel and DragonWave are expected to report earnings on May 4, 9 and 17, respectively.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Juniper (JNPR) Beats Q1 Earnings on Strong Cloud Growth
Juniper Networks Inc. (JNPR - Free Report) reported first-quarter 2017 non-GAAP earnings (including share-based compensation and share-based payroll tax expense) of 34 cents per share, beating the Zacks Consensus Estimate by three cents.
Excluding these items, earnings increased 24.3% from the year-ago quarter to 46 cents per share. The growth was driven by solid revenues, which increased 11.2% year over year to $1.22 billion, comfortably surpassing the Zacks Consensus Estimate and its own expectation of $1.20 billion (+/- $30 million). The year-over-year revenue growth was much better-than management’s expectation of 9%.
Shares increased more than 3% in after-hour trading following the earnings release. We note that the company has outperformed the Zacks Wireless Equipment industry on a year-to-date basis. While the stock gained 1.9%, the industry lost 6.1%.
Management noted that pricing pressure, unfavorable product and customer mix along with higher DRAM memory prices will continue to hurt gross margin in the rest of 2017. Moreover lumpy router revenue growth is also a concern.
Despite these challenges, we believe that Juniper has significant growth opportunity based on the strong adoption of its cloud products (particularly in data center), which jumped 25% from the year-ago quarter. Notably, four out of top 10 customers were cloud providers in the reported quarter.
Moreover, strong demand for its switching product (the QFX line) will drive top-line growth. Further, stringent cost control and shareholder friendly initiatives will aid the stock to maintain upside against the broader market in 2017.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Juniper Networks, Inc. Price, Consensus and EPS Surprise | Juniper Networks, Inc. Quote
Top-Line Detail
Product revenues (67.9% of total revenue) increased 10.1% on a year-over-year basis to $828.9 million. On the other hand, services revenues (32.1% of total revenue) climbed 13.7% to $392.1 million.
The networking solutions provider witnessed year-over-year revenue growth in the Switching product category, which surged 37.7% to $241.6 million. Routing category revenues also inched up 3.5% year over year to $521.6 million. However, Security revenues declined 10.5% to $65.7 million.
Juniper noted strong demand for its QFX family of products, revenues from which soared 50% on a year-over-year basis. Moreover, PTX had another strong quarter while MX revenue also increased.
Geographically, the company registered a year-over-year increase in revenues from America (up 13.3%) and Asia Pacific (up 22%), while revenues from EMEA were almost flat.
Operational Details
Adjusted gross margin contracted 120 basis points (bps) year over year to 62%, primarily due to unfavorable product (down 200 bps) and customer mix. The company expanded footprint into certain strategic APAC Telecom and Cloud customers, which are low margin business. Gross margin was close to management’s guidance of 62.5% (+/- 0.5%).
As percentage of revenues, general & administrative (G&A), sales & marketing (S&M) and research & development (R&D) expenses decreased 20 bps, 110 bps and 170 bps, respectively on a year-over-year basis.
As a result, total operating expense (including stock-based compensation and share-based payroll tax expense) as percentage of revenues declined 300 bps to 46.8%.
In dollar terms, total operating expense (excluding stock-based compensation and share-based payroll tax expense) increased 4.4% to $509.1 million, lower than guidance of $515 million (+/- $5 million).
Hence, operating margin (including stock-based compensation and share-based payroll tax expense) expanded 110 bps to 15.3% in the reported quarter.
Excluding stock-based compensation and share-based payroll tax expense, operating margin expanded 150 bps to 20.8%, which beat management’s guidance of almost 19.5%.
Cash Flow/Share Buyback
Total cash, cash equivalents, and short-term investments as of Mar 31, 2017 were $2.98 billion, as compared with $3.66 billion as of Dec 31, 2016. Juniper’s net cash flows from operations were $545.3 million, as compared with $334 million in fourth-quarter 2016.
Juniper repurchased $125 million of shares and paid $38 million in dividends in the reported quarter.
Guidance
Juniper anticipates revenues of approximately $1.28 billion (+/- $30 million) for second-quarter 2017, reflecting almost 5% growth, which falls within management’s long-term revenue growth expectation of 3–6%.
Non-GAAP gross margin is projected to be around 62.5% (+/- 0.5%). The company expects non-GAAP operating expenses of $500 million (+/- $5 million), and non-GAAP operating margin of almost 23.5%.
Non-GAAP earnings are anticipated to be 54 cents per share (+/- 3 cents). The Zacks Consensus Estimate (including stock-based compensation expense) is currently pegged at 42 cents.
Juniper still expects revenues to grow in 2017, driven by a differentiated product portfolio and strong adoption of cloud products. For the rest of 2017, management expects non-GAAP gross margin to be similar to the first-quarter figure (lower than long-term expectation of 63%), due to unfavorable customer and product mix along with higher cost for certain memory components.
The company expects to achieve long-term operating expense as percentage of revenue guidance of 39% in 2017.
Management expects continued strong cash flow generation and plans to return approximately 50% of free cash flow to shareholders.
Zacks Rank & Key Picks
Currently, Juniper carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader technology sector are PC-Tel Inc. , DragonWave and Motorola Solutions (MSI - Free Report) . While PC-Tel sports a Zacks Rank #1 (Strong Buy), both DragonWave and Motorola carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Motorola, PC-Tel and DragonWave are expected to report earnings on May 4, 9 and 17, respectively.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>