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Why Is ADTRAN Holdings (ADTN) Up 15.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for ADTRAN Holdings (ADTN - Free Report) . Shares have added about 15.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ADTRAN Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ADTRAN Reports Wider Q2 Loss on Lower Revenues Y/Y
ADTRAN reported lackluster results for the second quarter of 2024. The company’s bottom line was wider than the Zacks Consensus Estimate due to a tough macroeconomic environment. However, the top line matched estimates, supported by increased customer growth in the United States and Europe due to their latest fiber networking solutions.
Net Income
On a GAAP basis, net loss in the second quarter was $49.9 million or a loss of 63 cents per share compared with a loss of $39.1 million or a loss of 50 cents per share in the prior-year quarter. Non-GAAP net loss was $18.8 million or a loss of 24 cents per share. The loss was wider than the Zacks Consensus Estimate of 10 cents.
Revenues
Quarterly total revenues dipped to $226 million from $327.4 million in the year-ago quarter, owing to soft demand trends across the network solutions business. The top line, however, aligned with the consensus estimate.
Revenues from Network Solutions in the reported quarter were $179.2 million compared with $283 million in the year-ago quarter. Services and Support revenues were $46.8 million, up from $44.4 million a year ago.
Other Details
Total cost of sales decreased from $234.8 million to $144.4 million. GAAP gross profit came in at $81.6 million compared with $92.6 million in the year-earlier quarter. Operating loss in the quarter was $38.3 million compared with $44.6 million reported in the year-ago quarter.
Non-GAAP gross margin in the reported quarter was 41.9% compared with 38.6% in the prior-year quarter. Non-GAAP operating margin in the second quarter declined to 0.7% from 1.1%.
Cash Flow & Liquidity
In the first six months of 2024, ADTRAN generated $56.5 million of cash from operating activities against a cash utilization of $36.2 million in the year-ago period. As of Jun 30, 2024, the company had $111.2 million in cash and cash equivalents with $30.6 million of deferred compensation liability.
Moving Forward
For the third quarter of 2024, management expects revenues in the range of $215-235 million. Non-GAAP operating margin is expected to be in a range of -1% to +3%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted -10% due to these changes.
VGM Scores
Currently, ADTRAN Holdings has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
ADTRAN Holdings has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
ADTRAN Holdings belongs to the Zacks Technology Services industry. Another stock from the same industry, Block (SQ - Free Report) , has gained 12.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Block reported revenues of $6.16 billion in the last reported quarter, representing a year-over-year change of +11.2%. EPS of $0.93 for the same period compares with $0.39 a year ago.
For the current quarter, Block is expected to post earnings of $0.88 per share, indicating a change of +60% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Block. Also, the stock has a VGM Score of C.
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Why Is ADTRAN Holdings (ADTN) Up 15.2% Since Last Earnings Report?
A month has gone by since the last earnings report for ADTRAN Holdings (ADTN - Free Report) . Shares have added about 15.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ADTRAN Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ADTRAN Reports Wider Q2 Loss on Lower Revenues Y/Y
ADTRAN reported lackluster results for the second quarter of 2024. The company’s bottom line was wider than the Zacks Consensus Estimate due to a tough macroeconomic environment. However, the top line matched estimates, supported by increased customer growth in the United States and Europe due to their latest fiber networking solutions.
Net Income
On a GAAP basis, net loss in the second quarter was $49.9 million or a loss of 63 cents per share compared with a loss of $39.1 million or a loss of 50 cents per share in the prior-year quarter. Non-GAAP net loss was $18.8 million or a loss of 24 cents per share. The loss was wider than the Zacks Consensus Estimate of 10 cents.
Revenues
Quarterly total revenues dipped to $226 million from $327.4 million in the year-ago quarter, owing to soft demand trends across the network solutions business. The top line, however, aligned with the consensus estimate.
Revenues from Network Solutions in the reported quarter were $179.2 million compared with $283 million in the year-ago quarter. Services and Support revenues were $46.8 million, up from $44.4 million a year ago.
Other Details
Total cost of sales decreased from $234.8 million to $144.4 million. GAAP gross profit came in at $81.6 million compared with $92.6 million in the year-earlier quarter. Operating loss in the quarter was $38.3 million compared with $44.6 million reported in the year-ago quarter.
Non-GAAP gross margin in the reported quarter was 41.9% compared with 38.6% in the prior-year quarter. Non-GAAP operating margin in the second quarter declined to 0.7% from 1.1%.
Cash Flow & Liquidity
In the first six months of 2024, ADTRAN generated $56.5 million of cash from operating activities against a cash utilization of $36.2 million in the year-ago period. As of Jun 30, 2024, the company had $111.2 million in cash and cash equivalents with $30.6 million of deferred compensation liability.
Moving Forward
For the third quarter of 2024, management expects revenues in the range of $215-235 million. Non-GAAP operating margin is expected to be in a range of -1% to +3%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted -10% due to these changes.
VGM Scores
Currently, ADTRAN Holdings has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
ADTRAN Holdings has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
ADTRAN Holdings belongs to the Zacks Technology Services industry. Another stock from the same industry, Block (SQ - Free Report) , has gained 12.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Block reported revenues of $6.16 billion in the last reported quarter, representing a year-over-year change of +11.2%. EPS of $0.93 for the same period compares with $0.39 a year ago.
For the current quarter, Block is expected to post earnings of $0.88 per share, indicating a change of +60% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Block. Also, the stock has a VGM Score of C.