Earnings Beat: NETGEAR, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
NETGEAR, Inc. (NASDAQ:NTGR) just released its latest third-quarter results and things are looking bullish. Statutory revenue and earnings both blasted past expectations, with revenue of US$378m beating expectations by 21% and earnings per share (EPS) reaching US$0.83, some 61% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for NETGEAR
Taking into account the latest results, the current consensus from NETGEAR's four analysts is for revenues of US$1.23b in 2021, which would reflect a notable 8.2% increase on its sales over the past 12 months. Per-share earnings are expected to jump 160% to US$2.35. Before this earnings report, the analysts had been forecasting revenues of US$1.14b and earnings per share (EPS) of US$1.79 in 2021. So it seems there's been a definite increase in optimism about NETGEAR's future following the latest results, with a considerable lift to the earnings per share forecasts in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 16% to US$42.50per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic NETGEAR analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$39.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the NETGEAR's past performance and to peers in the same industry. One thing stands out from these estimates, which is that NETGEAR is forecast to grow faster in the future than it has in the past, with revenues expected to grow 8.2%. If achieved, this would be a much better result than the 6.6% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 3.1% next year. Not only are NETGEAR's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards NETGEAR following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple NETGEAR analysts - going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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