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Here's Why Investors Should Retain NetApp (NTAP) Stock For Now
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NetApp‘s (NTAP - Free Report) performance is benefiting from continued strength in Hybrid Cloud and Public Cloud segments and robust billings growth.
NetApp’s fiscal 2023 and fiscal 2024 earnings are expected to increase 3.2% and 10.6%, respectively, year over year. Revenues are anticipated to rise 6.2% and 8% in fiscal 2023 and fiscal 2024, respectively.
For the first quarter of fiscal 2023, the consensus estimate for revenues stands at $1.55 billion, indicating an increase of 6.4%. The company expects net revenues in the range of $1.475-$1.625 billion, indicating year-over-year growth of 6% at the mid-point. The company anticipates non-GAAP earnings for first-quarter fiscal 2023 between $1.05 and $1.15 per share. The consensus estimate for earnings stands at $1.10 per share.
In the last reported quarter, NetApp delivered non-GAAP earnings of $1.42 per share, which surpassed the Zacks Consensus Estimate by 11.8% and increased 21.4% year over year. The company had anticipated non-GAAP earnings between $1.21 and $1.31 per share. Revenues of $1.68 billion increased 8% year over year. The company had projected revenues in the range of $1.635-$1.735 billion. The upside was driven by strong demand for All-flash and object storage solutions.
NetApp outpaced estimates in all of the trailing four quarters, delivering an earnings surprise of 12.6%, on average.
Moreover, the company has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Image Source: Zacks Investment Research
Amid the ongoing volatility, NetApp stock has been more resilient compared with the Zacks sub-industry it belongs to. The stock has lost 6.4% in the past year compared with a 7.3% decline of the industry.
NTAP stock is down 22% from its 52-week high level of $96.82 on Jan 14, 2022, making it relatively affordable for investors.
The company also has a share repurchase plan in place. In the last reported quarter, the company repurchased shares worth $250 million and paid dividends worth $111 million. The company’s dividend yield and payout ratio are pegged at 2.73% and 0.45, respectively.
Strong Fundamentals
Headquartered in Sunnyvale, CA, NetApp specializes in providing cloud services, systems and software to business organizations to help them optimally operate their applications from the data center to the cloud. The continuation of work from home and hybrid work innovation are other driving factors.
The company is gaining from the higher clout of cloud-integrated all-flash and object storage solutions. Software product revenues are gaining from the favorable mix shift to the all-flash portfolio.
The increasing clout of Spot by NetApp portfolio — which facilitates enterprises to make multi-cloud management easier and lower expenses — is driving the company’s Public Cloud services business.
The rapid adoption of Microsoft Azure NetApp Files, Cloud Volumes, and Cloud Insights is a tailwind. Strategic acquisitions like Spot, Instaclustr, Fylamynt and CloudCheckr bode well.
Apart from these factors, NetApp’s strengthening go-to-market activities, various cloud collaborations and continued product innovation are other growth drivers.
However, macroeconomic uncertainty, lingering supply chain headwinds and substantial increases in freight and logistical and component costs remain major headwinds for this Zacks Rank #3 (Hold) stock. The company expects supply chain troubles to affect product margins in fiscal 2023, albeit at a gradually declining impact.
The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days. Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, the average being 12.6%. Shares of BMI have lost 2.1% of their value in the past year.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $3.99 per share, up 8.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.
ANET earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 43.5% in the past year.
The Zacks Consensus Estimate for Intuit’s fiscal 2022 earnings is pegged at $11.72 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 15.6%.
Intuit’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 16.8%. Shares of INTU have lost 12.4% in the past year.
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Here's Why Investors Should Retain NetApp (NTAP) Stock For Now
NetApp‘s (NTAP - Free Report) performance is benefiting from continued strength in Hybrid Cloud and Public Cloud segments and robust billings growth.
NetApp’s fiscal 2023 and fiscal 2024 earnings are expected to increase 3.2% and 10.6%, respectively, year over year. Revenues are anticipated to rise 6.2% and 8% in fiscal 2023 and fiscal 2024, respectively.
For the first quarter of fiscal 2023, the consensus estimate for revenues stands at $1.55 billion, indicating an increase of 6.4%. The company expects net revenues in the range of $1.475-$1.625 billion, indicating year-over-year growth of 6% at the mid-point. The company anticipates non-GAAP earnings for first-quarter fiscal 2023 between $1.05 and $1.15 per share. The consensus estimate for earnings stands at $1.10 per share.
In the last reported quarter, NetApp delivered non-GAAP earnings of $1.42 per share, which surpassed the Zacks Consensus Estimate by 11.8% and increased 21.4% year over year. The company had anticipated non-GAAP earnings between $1.21 and $1.31 per share. Revenues of $1.68 billion increased 8% year over year. The company had projected revenues in the range of $1.635-$1.735 billion. The upside was driven by strong demand for All-flash and object storage solutions.
NetApp outpaced estimates in all of the trailing four quarters, delivering an earnings surprise of 12.6%, on average.
Moreover, the company has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Image Source: Zacks Investment Research
Amid the ongoing volatility, NetApp stock has been more resilient compared with the Zacks sub-industry it belongs to. The stock has lost 6.4% in the past year compared with a 7.3% decline of the industry.
NTAP stock is down 22% from its 52-week high level of $96.82 on Jan 14, 2022, making it relatively affordable for investors.
The company also has a share repurchase plan in place. In the last reported quarter, the company repurchased shares worth $250 million and paid dividends worth $111 million. The company’s dividend yield and payout ratio are pegged at 2.73% and 0.45, respectively.
Strong Fundamentals
Headquartered in Sunnyvale, CA, NetApp specializes in providing cloud services, systems and software to business organizations to help them optimally operate their applications from the data center to the cloud. The continuation of work from home and hybrid work innovation are other driving factors.
The company is gaining from the higher clout of cloud-integrated all-flash and object storage solutions. Software product revenues are gaining from the favorable mix shift to the all-flash portfolio.
The increasing clout of Spot by NetApp portfolio — which facilitates enterprises to make multi-cloud management easier and lower expenses — is driving the company’s Public Cloud services business.
The rapid adoption of Microsoft Azure NetApp Files, Cloud Volumes, and Cloud Insights is a tailwind. Strategic acquisitions like Spot, Instaclustr, Fylamynt and CloudCheckr bode well.
Apart from these factors, NetApp’s strengthening go-to-market activities, various cloud collaborations and continued product innovation are other growth drivers.
However, macroeconomic uncertainty, lingering supply chain headwinds and substantial increases in freight and logistical and component costs remain major headwinds for this Zacks Rank #3 (Hold) stock. The company expects supply chain troubles to affect product margins in fiscal 2023, albeit at a gradually declining impact.
Stocks to Consider
Some better-ranked stocks from the broader technology sector worth consideration are Arista Networks (ANET - Free Report) , Intuit (INTU - Free Report) and Badger Meter (BMI - Free Report) . Arista Networks and Badger Meter sport a Zacks Rank #1 (Strong Buy), while Intuit carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days. Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, the average being 12.6%. Shares of BMI have lost 2.1% of their value in the past year.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $3.99 per share, up 8.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.
ANET earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 43.5% in the past year.
The Zacks Consensus Estimate for Intuit’s fiscal 2022 earnings is pegged at $11.72 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 15.6%.
Intuit’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 16.8%. Shares of INTU have lost 12.4% in the past year.