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Why Is Itron (ITRI) Up 1.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Itron (ITRI - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Itron due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Itron's Q2 Earnings & Revenues Beat Estimates
Itron delivered second-quarter 2019 non-GAAP earnings of 87 cents per share beating the Zacks Consensus Estimate by 39 cents. The figure improved significantly by 70.6% from the year-ago quarter and 24.3% sequentially.
Revenues came in $635.04 million, which surpassed the Zacks Consensus Estimate of $602 million. Further, the figure advanced 8.4% year over year and 3.3% from the previous quarter.
The top line was driven by robust performance of the company’s networked solution and outcomes segments. Further, solid customer demand acted as a tailwind.
Product and services revenues accounted for 89.1% and 10.9% of total revenues, respectively. While product revenues improved 9.7% from the year-ago quarter, services revenues declined 1.4%.
The company’s bookings were $702 million and backlog came in at $3.1 billion during the reported quarter.
Segment in Detail
Device Solutions: The company generated $217.7 million revenues (34.3% of total revenues) from this segment, down 7.8% from the year-ago quarter. This was primarily owing to decline in smart spec volumes in the EMEA region during the reported quarter. Moreover, foreign exchange headwinds impacted the segment’s top line. Further, operating margin of this segment contracted 160 bps year over year.
Networked Solutions: Revenues from this segment came in $355.9 million (56% of total revenues), increased 20.2% year over year. This was primarily driven by stronger-than-expected demand in North America. Further, growing customer deployments contributed to the results. However, operating margin contracted 20 bps year over year during the reported quarter.
Outcomes: This segment generated $61.4 million revenues (9.7% of total revenues), up 15% on a year-over-year basis. The company witnessed persistent growth in North America deployments, which in turn drove the segment’s top line. Moreover, early deployment of onetime software licenses in the second quarter remained a major positive. Furthermore, operating margin came in 23.4% against 7.9% in the year-ago quarter.
Operating Details
For the second quarter, Itron’s gross margin was 30.1%, which remained flat on a year-over-year basis. This can be attributed to high component costs, which offset the positive impact of favorable product mix.
Non-GAAP operating expenses were $128.04 million, down 3.4% year over year. This decrease resulted from strong restructuring initiatives.
Further, non-GAAP operating margin came in 9.9%, expanding 240 bps from the year-ago quarter.
Balance Sheet and Cash Flows
As of Jun 30, 2019, cash and cash equivalents totaled $135.7 million, up from $110.8 million as of Mar 31, 2019. Accounts receivables were $466.4 million, declining from $473.1 million in the previous quarter.
Itron generated $53.1 million cash from operations compared with $24.9 million generated in the previous quarter.
Moreover, the company generated free cash flow of $38.04 million, up from $13.5 million in prior quarter.
2019 Guidance
For 2019, management has revised the non-GAAP earnings guidance upward from $2.35-$2.75 to $2.80-$3.00 per share.
Further, the company expects revenues within a range of $2.45-$2.50 billion which is higher than the previously guided range of $2.35-$2.45 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 16.62% due to these changes.
VGM Scores
At this time, Itron has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Itron has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Itron (ITRI) Up 1.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Itron (ITRI - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Itron due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Itron's Q2 Earnings & Revenues Beat Estimates
Itron delivered second-quarter 2019 non-GAAP earnings of 87 cents per share beating the Zacks Consensus Estimate by 39 cents. The figure improved significantly by 70.6% from the year-ago quarter and 24.3% sequentially.
Revenues came in $635.04 million, which surpassed the Zacks Consensus Estimate of $602 million. Further, the figure advanced 8.4% year over year and 3.3% from the previous quarter.
The top line was driven by robust performance of the company’s networked solution and outcomes segments. Further, solid customer demand acted as a tailwind.
Product and services revenues accounted for 89.1% and 10.9% of total revenues, respectively. While product revenues improved 9.7% from the year-ago quarter, services revenues declined 1.4%.
The company’s bookings were $702 million and backlog came in at $3.1 billion during the reported quarter.
Segment in Detail
Device Solutions: The company generated $217.7 million revenues (34.3% of total revenues) from this segment, down 7.8% from the year-ago quarter. This was primarily owing to decline in smart spec volumes in the EMEA region during the reported quarter. Moreover, foreign exchange headwinds impacted the segment’s top line. Further, operating margin of this segment contracted 160 bps year over year.
Networked Solutions: Revenues from this segment came in $355.9 million (56% of total revenues), increased 20.2% year over year. This was primarily driven by stronger-than-expected demand in North America. Further, growing customer deployments contributed to the results. However, operating margin contracted 20 bps year over year during the reported quarter.
Outcomes: This segment generated $61.4 million revenues (9.7% of total revenues), up 15% on a year-over-year basis. The company witnessed persistent growth in North America deployments, which in turn drove the segment’s top line. Moreover, early deployment of onetime software licenses in the second quarter remained a major positive. Furthermore, operating margin came in 23.4% against 7.9% in the year-ago quarter.
Operating Details
For the second quarter, Itron’s gross margin was 30.1%, which remained flat on a year-over-year basis. This can be attributed to high component costs, which offset the positive impact of favorable product mix.
Non-GAAP operating expenses were $128.04 million, down 3.4% year over year. This decrease resulted from strong restructuring initiatives.
Further, non-GAAP operating margin came in 9.9%, expanding 240 bps from the year-ago quarter.
Balance Sheet and Cash Flows
As of Jun 30, 2019, cash and cash equivalents totaled $135.7 million, up from $110.8 million as of Mar 31, 2019. Accounts receivables were $466.4 million, declining from $473.1 million in the previous quarter.
Itron generated $53.1 million cash from operations compared with $24.9 million generated in the previous quarter.
Moreover, the company generated free cash flow of $38.04 million, up from $13.5 million in prior quarter.
2019 Guidance
For 2019, management has revised the non-GAAP earnings guidance upward from $2.35-$2.75 to $2.80-$3.00 per share.
Further, the company expects revenues within a range of $2.45-$2.50 billion which is higher than the previously guided range of $2.35-$2.45 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 16.62% due to these changes.
VGM Scores
At this time, Itron has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Itron has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.