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Why Is Maxwell (MXWL) Down 26.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Maxwell Technologies (MXWL - Free Report) . Shares have lost about 26.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Maxwell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Maxwell Q3 Loss Narrower Than Expected, Revenues Lag

Maxwell Technologies reported adjusted loss of 16 cents per share in the third quarter of 2018, which was narrower than the Zacks Consensus Estimate of loss of 18 cents. However, on a year-over-year basis, the bottom line widened from the year-ago loss of 13 cents per share.

Excluding one-time items, the company incurred loss of 23 cents per share, narrower than loss of 37 cents in the prior-year quarter.

Revenues

Maxwell Technologies’ third-quarter revenues of $33.7 million missed the Zacks Consensus Estimate of 34 million by a marginal 0.9%. However, the top line decreased 6.4% from the year-ago quarter’s $36 million.

High voltage revenues fell 12.8% in the quarter and energy storage revenues declined 3.7%, resulting in the overall decrease in total revenues.

Operational Highlights

In the quarter under review, the company’s cost of revenues was $27.4 million, down 4% year over year.

Total operating expenses were $14.6 million compared with $20.7 million in the prior-year quarter. The sequential decrease was driven primarily by lower stock-based compensation expenses.


Capital expenditures during the quarter were $1.9 million, primarily related to the expansion of the Korea manufacturing facility, and ultra capacitor, lithium-ion capacitor and dry battery electrode equipment.

Q3 Business Highlights

Maxwell announced a grid energy storage subsystem design-in with Siemens Transmission Solutions. This solution is intended to stabilize global power grids, enabling ISOs, electric utilities and transmission system operators to have better control of their grids and reduce the risk of blackouts.

Maxwell announced that its CONDIS® branded capacitors will be the first to market with the largest 550kV DC meshed grid, which includes four types of new capacitors for DC converter valve ultra high voltage circuit breakers using four lines and four substations.

Financial Condition

As of Sep 30, 2018, Maxwell Technologies had cash and cash equivalents of $23.6 million compared with $50.1 million as of Dec 31, 2017.

As of Sep 30, 2018, long-term debt (excluding current portion) was $36.5 million compared with $35.1 million as of Dec 31, 2017.

Net cash used in operating activities was $14 million at the end of third-quarter 2018, up from $2.3 million at the end of the prior-year quarter.

Guidance

Maxwell Technologies has lowered its total revenue expectations to $25-$27 million for the fourth quarter of 2018, from its previous range of $32-$36 million. The company projects adjusted net loss to be 18 cents per share.

Adjusted gross margin is expected to be 18-20% compared to the previous quarter’s 18.5-21.5%. Adjusted operating expenses are projected to be $12.6-$13.0 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -22.5% due to these changes.

VGM Scores

At this time, Maxwell has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest 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 broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Maxwell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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