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Why Is Adtran (ADTN) Down 1.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Adtran (ADTN - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Adtran due for a breakout? 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.
ADTRAN Q1 Loss Narrower Than Expected, Revenues Down
ADTRAN reported unimpressive first-quarter 2020 results, with the bottom and the top line deteriorating on a year-over-year basis.
Net Loss
On a GAAP basis, net loss for the March quarter was $10 million or 21 cents per share against net income of $0.8 million or 2 cents per share in the year-ago quarter. The deterioration was primarily caused by a significant loss in net investments coupled with lower revenues in the reported quarter.
Quarterly non-GAAP net loss came in at $2.2 million or loss of 5 cents per share against net income of $4.9 million or 10 cents per share in the prior-year quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 11 cents.
Revenues
Quarterly revenues were $114.5 million compared with $143.8 million in the year-earlier quarter and surpassed the consensus estimate of $111 million. The downside was caused by lower sales at Network Solutions segment, which fell 22.6% year over year to $97.4 million due to the COVID-19 pandemic. Sales from Services & Support segment were $17.2 million, down 4.6%.
Other Details
Total cost of sales declined from $83.2 million to $62.9 million. Gross profit came in at $51.6 million compared with $60.6 million in the prior-year quarter. Operating loss for the first quarter improved to $4.9 million from an operating loss of $6.2 million in the year-ago quarter.
Notably, the company communicated that its board of directors has announced a quarterly cash dividend payout of 9 cents per share to shareholders on record as of May 21, payable on Jun 4.
Cash Flow & Liquidity
During the first three months of 2020, ADTRAN utilized $0.02 million of net cash for operating activities against $9.7 million of cash flow generated in year-ago quarter. As of Mar 31, the networking equipment maker had $71.3 million in cash and equivalents with $6.8 million of non-current liabilities.
Going Forward
Despite challenging macroeconomic conditions associated with the COVID-19 pandemic, ADTRAN emerged as a strong player and witnessed robust demand in emerging service provider markets. Notably, the company continues to optimize its customer, geographic and product diversity momentum as communications service providers scale up their network capabilities. The company has also been selected by numerous Tier 1 operators for its diversified portfolio of software-defined access, fiber extension and 10G PON solutions. Moreover, its strategy of diversification across the globe along with technological advancements instills optimism.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 50% due to these changes.
VGM Scores
Currently, Adtran has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, 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 D. 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 Adtran 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 Adtran (ADTN) Down 1.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Adtran (ADTN - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Adtran due for a breakout? 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.
ADTRAN Q1 Loss Narrower Than Expected, Revenues Down
ADTRAN reported unimpressive first-quarter 2020 results, with the bottom and the top line deteriorating on a year-over-year basis.
Net Loss
On a GAAP basis, net loss for the March quarter was $10 million or 21 cents per share against net income of $0.8 million or 2 cents per share in the year-ago quarter. The deterioration was primarily caused by a significant loss in net investments coupled with lower revenues in the reported quarter.
Quarterly non-GAAP net loss came in at $2.2 million or loss of 5 cents per share against net income of $4.9 million or 10 cents per share in the prior-year quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 11 cents.
Revenues
Quarterly revenues were $114.5 million compared with $143.8 million in the year-earlier quarter and surpassed the consensus estimate of $111 million. The downside was caused by lower sales at Network Solutions segment, which fell 22.6% year over year to $97.4 million due to the COVID-19 pandemic. Sales from Services & Support segment were $17.2 million, down 4.6%.
Other Details
Total cost of sales declined from $83.2 million to $62.9 million. Gross profit came in at $51.6 million compared with $60.6 million in the prior-year quarter. Operating loss for the first quarter improved to $4.9 million from an operating loss of $6.2 million in the year-ago quarter.
Notably, the company communicated that its board of directors has announced a quarterly cash dividend payout of 9 cents per share to shareholders on record as of May 21, payable on Jun 4.
Cash Flow & Liquidity
During the first three months of 2020, ADTRAN utilized $0.02 million of net cash for operating activities against $9.7 million of cash flow generated in year-ago quarter. As of Mar 31, the networking equipment maker had $71.3 million in cash and equivalents with $6.8 million of non-current liabilities.
Going Forward
Despite challenging macroeconomic conditions associated with the COVID-19 pandemic, ADTRAN emerged as a strong player and witnessed robust demand in emerging service provider markets. Notably, the company continues to optimize its customer, geographic and product diversity momentum as communications service providers scale up their network capabilities. The company has also been selected by numerous Tier 1 operators for its diversified portfolio of software-defined access, fiber extension and 10G PON solutions. Moreover, its strategy of diversification across the globe along with technological advancements instills optimism.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 50% due to these changes.
VGM Scores
Currently, Adtran has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, 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 D. 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 Adtran has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.