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ARRIS International plc’s fourth-quarter 2016 earnings (excluding special items) of 70 cents per share beat the Zacks Consensus Estimate by 6 cents. Also, earnings improved significantly from the year-ago quarter.
Revenues of $1,759 million beat the Zacks Consensus Estimate of $1,695 million. Moreoever, the top line improved substantially on a year-over-year basis. In fact, the quarterly results were benefited by the acquisition of Pace plc.
Quarterly Performance Details
Quarterly gross margin (on an adjusted basis) of the Suwanee, GA-based company was 25.6% compared with 32.8% in the year-ago quarter. Total order backlog at the end of the quarter under review was $1.106 billion as against $715.8 million at the end of the year-ago quarter. Additionally, book-to-bill ratio was 1.04 compared with 1.14 in the prior-year quarter.
At the end of the fourth quarter, ARRIS generated cash from operating activities of $40 million compared with $127 million a year ago. The company exited 2016 with cash resources of approximately $1.107 billion compared with $879.1 million at the end of 2015. Long-term debt & financing lease obligations (net of current portion) was $2,180 million compared with approximately $1,496.3 million at year-end 2015.
ARRIS International PLC Price, Consensus and EPS Surprise
In a bid to expand further, ARRIS entered into a deal with Broadcom Limited (AVGO - Free Report) to purchase Brocade Communication Systems Inc.'s Ruckus Wireless and ICX Switch units for $800 million in cash, following Broadcom's acquisition of Brocade. The acquisition is expected to be accretive to ARRIS’ adjusted earnings in the first 12 months following the closure.
Guidance
ARRIS expects earnings (adjusted) in the band of 36 –40 cents in the first quarter of 2017. Moreover, revenues are expected in the band of $1.44–$1.49 billion. The Zacks Consensus Estimate for the first quarter stands at 60 cents on revenues of $1.65 billion. The company’s below-par guidance disappointed investors and the stock fell following the earnings report, despite the outperformance.
Zacks Rank & A Key Pick
ARRIS holds a Zacks Rank # 2 (Buy). Investors interested in the broader Computer & Technology sector may also consider Arista Networks Inc. (ANET - Free Report) , which sports a Zacks Rank # 1 (Strong Buy). The company has an impressive history with respect to earnings per share and has outshined the Zacks Consensus Estimate in each of the last four quarters by an average of 17.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks' Top 10 Stocks for 2017
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ARRIS (ARRS) Tops Q4 Earnings & Sales; Dull View Hits Stock
ARRIS International plc’s fourth-quarter 2016 earnings (excluding special items) of 70 cents per share beat the Zacks Consensus Estimate by 6 cents. Also, earnings improved significantly from the year-ago quarter.
Revenues of $1,759 million beat the Zacks Consensus Estimate of $1,695 million. Moreoever, the top line improved substantially on a year-over-year basis. In fact, the quarterly results were benefited by the acquisition of Pace plc.
Quarterly Performance Details
Quarterly gross margin (on an adjusted basis) of the Suwanee, GA-based company was 25.6% compared with 32.8% in the year-ago quarter. Total order backlog at the end of the quarter under review was $1.106 billion as against $715.8 million at the end of the year-ago quarter. Additionally, book-to-bill ratio was 1.04 compared with 1.14 in the prior-year quarter.
At the end of the fourth quarter, ARRIS generated cash from operating activities of $40 million compared with $127 million a year ago. The company exited 2016 with cash resources of approximately $1.107 billion compared with $879.1 million at the end of 2015. Long-term debt & financing lease obligations (net of current portion) was $2,180 million compared with approximately $1,496.3 million at year-end 2015.
ARRIS International PLC Price, Consensus and EPS Surprise
ARRIS International PLC Price, Consensus and EPS Surprise | ARRIS International PLC Quote
Other Development
In a bid to expand further, ARRIS entered into a deal with Broadcom Limited (AVGO - Free Report) to purchase Brocade Communication Systems Inc.'s Ruckus Wireless and ICX Switch units for $800 million in cash, following Broadcom's acquisition of Brocade. The acquisition is expected to be accretive to ARRIS’ adjusted earnings in the first 12 months following the closure.
Guidance
ARRIS expects earnings (adjusted) in the band of 36 –40 cents in the first quarter of 2017. Moreover, revenues are expected in the band of $1.44–$1.49 billion. The Zacks Consensus Estimate for the first quarter stands at 60 cents on revenues of $1.65 billion. The company’s below-par guidance disappointed investors and the stock fell following the earnings report, despite the outperformance.
Zacks Rank & A Key Pick
ARRIS holds a Zacks Rank # 2 (Buy). Investors interested in the broader Computer & Technology sector may also consider Arista Networks Inc. (ANET - Free Report) , which sports a Zacks Rank # 1 (Strong Buy). The company has an impressive history with respect to earnings per share and has outshined the Zacks Consensus Estimate in each of the last four quarters by an average of 17.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>