ARRIS International plc’s (ARRS - Free Report) fourth-quarter 2017 earnings (excluding 81 cents from non-recurring items) of 88 cents per share beat the Zacks Consensus Estimate of 77 cents. Also, the bottom line improved 11.4% more than the year-ago quarter.
The earnings beat and its year-over-year increase seem to have pleased investors. As a result, shares of the company rose 4.2% in after-hours trading on Feb 14.
Revenues of $1,738.6 million fell short of the Zacks Consensus Estimate of $1,760.8 million. Moreover, the top line declined 1.2% year over year.
Quarterly gross margin (on an adjusted basis) of this Suwanee, GA-based company was 28.8% compared with 25.6% in the prior-year quarter. Total order backlog at the end of the quarter under review was $1.12 billion compared with $1.11 billion at the end of the comparable quarter last year. Additionally, book-to-bill ratio was 1.02 compared with 1.04 in the year-earlier quarter.
During the fourth quarter, ARRIS’ cashflow from operating activities came in at $77.8 million compared with $35.3 million, generated a year ago. Moreover, the company exited the reported quarter with cash and cash equivalents of approximately $487.57 million, lower than $980.12 million at the end of 2016. Approximately $822 million of cash resources were used to complete the acquisition of Ruckus Networks from Broadcom (AVGO - Free Report) in December 2017. This buyout is expected to be value accretive to the acquirer’s earnings in the first year.
Long-term debt & financing lease obligations (net of current portion) were $2.12 billion compared with approximately $2.18 billion at 2016-end. The company bought back 1.9 million shares for $50 million in the quarter under discussion.
Notably, ARRIS bought back 7.5 million shares for $197 million during 2017.
Q1 & 2018 Guidance
The company expects revenues in the range of $1.575-$1.625 billion for the first quarter of 2018. While earnings (adjusted) for the same period are estimated at 50-$55 cents per share. The Zacks Consensus Estimate for first-quarter earnings is pegged at 59 cents on revenues of $1.74 billion.
For 2018, the company anticipates revenues between $7.100 billion and $7.350 billion. Whereas earnings (adjusted) are projected between $2.80 and $3.05 per share. The Zacks Consensus Estimate for current-year earnings stands at $2.96 on revenues of $7.33 billion.
Zacks Rank & Key Picks
ARRIS carries a Zacks Rank #4 (Sell).
Two better-ranked stocks in the same space are Arista Networks, Inc. (ANET - Free Report) and AudioCodes Ltd. (AUDC - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Arista Networks and AudioCodes have rallied more than 77% and 18%, respectively, in the last six months.
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