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NETGEAR (NTGR) to Report Q4 Earnings: What's in the Cards?

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NETGEAR Inc. (NTGR - Free Report) is set to report fourth-quarter 2017 results on Feb 6. Notably, the company beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 12.23%.

NETGEAR’s third-quarter earnings of 81 cents per share beat the Zacks Consensus Estimate by 13 cents. The figure increased 35% sequentially and 6.6% on a year-over-year basis.

Revenues of $355.5 million also beat the Zacks Consensus Estimate of $349 million. The figure increased 7.5% sequentially and 5% year over year.

For fourth-quarter 2017, NETGEAR projects revenues between $375 million and $390 million. Non-GAAP operating margin is expected in the range of 7-8%.

Let’s see how things are shaping up for this announcement.

Key Factors

NETGEAR’s expanding portfolio is a key catalyst. The company is likely to benefit from increasing customer base as well as favorable product mix.

We expect NETGEAR’s strong product portfolio comprising offerings like Nighthawk WiFi routers, Arlo home security products and Orbi WiFI systems, to boost top-line growth. Moreover, the company is also doing well in the IP camera market.

During the quarter, NETGEAR launched Nighthawk X6S and Orbi Pro solutions with the patented FastLane3 technology. The company also launched the Arlo Pro 2, featuring higher-quality video with 1080p HD optional 24/7 continuous video recording and activities on monitoring. The device also supports Amazon’s Alexa.

Additionally, NETGEAR has expanded its family of switching products that operates at 100Mbps, 1Gbps, 2.5Gbps, 5Gbps or 10Gbps. It has introduced 24-Port Gigabit PoE+ Smart Managed Pro Switch, 48-port Gigabit Smart Managed Plus Switch (GS750E) and 12-Port 10-Gigabit Ethernet Smart Managed Pro Switch (XS712Tv2).

However, the service provider business continues to pose challenges with the company streamlining the segment. The contracting gigabit switch market is a headwind.

NETGEAR, Inc. Price and EPS Surprise

NETGEAR, Inc. Price and EPS Surprise | NETGEAR, Inc. Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. .

NETGEAR sports a Zacks Rank #1 but its Earnings ESP is 0.00%. Therefore, our proven model does not conclusively show that the company is likely to deliver a positive surprise this quarter.

Stocks That Warrant a Look

Here are few stocks that you may want to consider as our model shows that they have the right combination of elements to deliver an earnings beat in their upcoming release:

NVIDIA Corporation (NVDA - Free Report) with an Earnings ESP of +6.87% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Activision Blizzard (ATVI - Free Report) has an Earnings ESP of +4.99% and a Zacks Rank #3.

NCR Corporation (NCR - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank #3.

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