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NortonLifeLock (NLOK) Up 21% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for NortonLifeLock (NLOK - Free Report) . Shares have added about 21% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is NortonLifeLock 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 catalysts.

NortonLifeLock Q4 Earnings Beat Estimates

NortonLifeLock’s fourth-quarter fiscal 2021 non-GAAP earnings increased 54% from the year-ago quarter to 40 cents per share. Also, the bottom line beat the Zacks Consensus Estimate of 37 cents.

Revenues of $677 million surpassed the consensus mark of $658 million and rose 11% year over year. This outperformance was mainly driven by impressive customer growth.

Quarter Details

Direct average revenue per user (ARPU) decreased 3% year over year to $9.10 per month. Continued stabilization of direct customer count was a positive.

The company’s direct customer count increased 2 million year over year during the fiscal fourth quarter, bringing the total count to 23 million.

In the reported quarter, gross profit climbed 10.8% year over year to $573 million. Moreover, gross margin expanded 110 basis points (bps) to 85.3%.

Operating income on a non-GAAP basis jumped 34% year over year to $342 million. Operating margin was 50.5%, up 900 bps.

Balance Sheet

As of Apr 2, 2021, NortonLifeLock had $933 million in cash and cash equivalents, down sequentially from $1.05 billion. Long-term debt was $3.29 billion, down slightly from the $3.54 billion witnessed in the previous quarter.

Net cash of $356 million was provided by operating activities in the fiscal fourth quarter, as compared to $293 million of cash used in operational activities in the previous quarter.

Notably, the company authorized a quarterly cash dividend of $0.125 per share, payable on Jun 23 to all shareholders of record as of Jun 09.

Moreover, an additional share repurchase of $1.5 billion was authorized by the company, along with the remaining $274 million remaining in the current authorization, increasing the total share repurchase remaining to approximately $1.8 billion.

Full-Year Highlights

For full-year fiscal 2021, revenues came in at $2.55 billion, up 2.4% year over year. Non-GAAP earnings of $1.44 per share grew 60% year over year.

Guidance

For the first quarter of fiscal 2022, NortonLifeLock expects revenues between $680 million and $690 million. Non-GAAP earnings are expected between 40 cents and 42 cents per share.

For fiscal 2022, the company projects 8-10% year-over-year growth.

Moreover, non-GAAP earnings from continuing operations are expected between $1.65 and $1.75 per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, NortonLifeLock has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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 this revision looks promising. It comes with little surprise NortonLifeLock has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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