With the March-quarter earnings drawing to a close, industry peers are doing various analysis and comparisons to gauge the underlying metrics and relative performance. Let us perform a similar comparative analysis between two stocks in the Zacks Wireless Equipment industry — Juniper Networks, Inc. (JNPR - Free Report) and Harris Corporation (HRS - Free Report) — to pick the better investment option.
Juniper reported relatively healthy first-quarter 2018 results on the back of a solid performance from the cloud vertical and growth in enterprise business. Despite year-over-year decrease in earnings and revenues, the company was able to beat the respective estimates and remains confident of returning to a growth trajectory by the end of the year. Non-GAAP earnings for the reported quarter were $99.5 million or 28 cents per share compared with $178 million or 46 cents per share in the year-ago quarter owing to top-line woes. Non-GAAP earnings, however, beat the Zacks Consensus Estimate of 26 cents. Net revenues for the quarter were $1,082.6 million compared with $1,221 million in the prior-year period. Also, the tally exceeded the Zacks Consensus Estimate of $1,049 million.
Harris reported healthy third-quarter fiscal 2018 results, wherein both the top line and the bottom line surpassed the respective Zacks Consensus Estimate. Non-GAAP earnings from continuing operations were $1.67 per share compared with $1.38 in the year-earlier quarter, comfortably beating the Zacks Consensus Estimate of $1.62. Revenues for the quarter increased 5% year over year to $1,568 million, supported by growth across all three segments led by Electronic Systems and Communication Systems. The top line exceeded the Zacks Consensus Estimate of $1,548 million.
Based on recently-released earnings results, Juniper has a clear edge over Harris due to a better earnings and sales surprise percentage.
In the past year, Harris has clearly outperformed Juniper with an average return of 41.7% against a loss of 9.6% for the latter while the industry gained 7.2%.
Post earnings release, Juniper’s current-quarter estimates increased from 42 cents to 43 cents per share (up 2.4%) while that for the current year increased from $1.78 to $1.79 (up 0.6%).
Harris’ current-quarter estimates decreased to $1.76 from $1.78 post earnings release (down 1.1%) while current-year estimates increased to $6.48 per share from $6.44 (up 0.6%). With positive estimate revisions, investor sentiments appear to be more bullish on Juniper than Harris with respect to current-quarter estimates but fairly balanced for current-year estimates.
Juniper anticipates recording sequential growth in the second quarter with margin improvement, driven by steady demand patterns, higher volumes and cost structure efficiencies. The company expects revenues of approximately $1,175 million (+/- $30 million) for second-quarter 2018. Non-GAAP gross margin is projected to be around 59% (+/- 1%). The company expects non-GAAP operating margin of 17.5%. Non-GAAP earnings are anticipated to be 44 cents per share (+/- 3 cents).
Harris tweaked its projection for fiscal 2018 owing to impressive performance in the fiscal third quarter. It expects fiscal 2018 adjusted earnings per share in the band of $6.45-$6.50, up from prior expectations of $6.30-$6.50. Fiscal 2018 revenues are expected to be approximately $6.14 billion, reflecting a year-over-year increase of 4% from the earlier expectations of $6.08-6.14 billion. The company also anticipates adjusted free cash flow between $900 million to $925 million, up from the previous guidance of approximately $900 million.
Both Juniper and Harris currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
To Sum Up
Based on the current scenario, although the two stocks seem to match each other on most counts, Juniper appears to have trumped Harris on few metrics and stands out as a better investment proposition. A couple of top-ranked stocks in the industry are Motorola Solutions, Inc. (MSI - Free Report) and Ubiquiti Networks, Inc. (UBNT - Free Report) , both carrying a Zacks Rank #2 (Buy).
Motorola has a long-term earnings growth expectation of 8%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 12.1%.
Ubiquiti Networks has a long-term earnings growth expectation of 18.6%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 8.9%.
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