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Juniper (JNPR) Down 2.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Juniper Networks (JNPR - Free Report) . Shares have lost about 2.6% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Juniper 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.
Juniper Q4 Earnings Match Estimates, Revenues Rise Y/Y
Juniper reported healthy fourth-quarter 2019 results wherein the top line increased year over year and surpassed the Zacks Consensus Estimate.
The company returned to year-over-year growth during the reported quarter and saw encouraging trends across various areas of its business. These include record Enterprise sales, double-digit year-over-year growth in Cloud, solid momentum in Mist, and strength in its services organization.
Net Income
On a GAAP basis, net income for the December quarter declined to $168.4 million or 49 cents per share from $192.2 million or 55 cents per share in the prior-year quarter, primarily due to lower operating income. For 2019, net income was $345 million or 99 cents per share compared with $566.9 million or $1.60 per share in 2018.
Quarterly non-GAAP net income was $198.7 million or 58 cents per share compared with $205.7 million or 59 cents per share reported a year ago. The bottom line matched the Zacks Consensus Estimate.
Revenues
Fourth-quarter total net revenues were $1,208.1 million (above the midpoint of the company’s guidance) compared with $1,181 million reported in the year-ago quarter. The improvement was driven by the Cloud and Enterprise verticals, which more than offset anticipated weakness within its Service Provider business. The top line surpassed the consensus estimate of $1,190 million. For 2019, revenues declined 4.3% year over year to $4,445.4 million.
Product revenues (comprising Routing, Switching and Security, and accounting for 65.5% of total net revenues) for the quarter increased 2% year over year to $791.9 million backed by strong demand for switching products. Service revenues (accounting for 34.5% of total net revenues) were up 2.9% to $416.2 million. Juniper’s services team continues to execute extremely well with improved attach rates and renewals.
By vertical, net revenues from Cloud business increased 17.8% year over year to $279.8 million, primarily driven by routing and services. Net revenues from Service Provider unit were down 4.6% to $492.5 million. This reflects the ongoing challenges many of the company’s carrier customers are facing. Net revenues from Enterprise business increased to $435.8 million from $427.1 million, driven by switching.
Region wise, net revenues declined to $335.7 million from $344 million in Europe, Middle East, and Africa. Quarterly revenues in the Americas increased 6.6% year over year to $676.8 million. For Asia Pacific, net revenues decreased 3.2% to $195.6 million.
Other Details
Gross profit came in at $719.3 million compared with $710.9 million in the year-ago quarter supported by higher revenues. Total operating expenses increased from $514.1 million to $540.7 million mainly due to rise in sales & marketing, and R&D costs. Operating income was $178.6 million compared with $196.8 million. Non-GAAP operating income declined to $244.7 million from $248.7 million, with margin of 20.3% and 21.1%, respectively.
Concurrent with the results, Juniper communicated that its board of directors has approved a 5% increase in its quarterly cash dividend to 20 cents per share. The distribution is payable on Mar 23, 2020 to shareholders as of Mar 2, 2020.
Cash Flow & Liquidity
In 2019, Juniper generated $528.9 million of net cash from operations compared with $861.1 million in 2018. As of Dec 31, 2019, the computer network equipment maker had $1,215.8 million in cash and equivalents with $1,683.9 million of long-term debt compared with the respective tallies of $2,489 million and $1,789.1 million a year ago.
Q1 Outlook
Juniper has provided its guidance for first-quarter 2020. It expects revenues of $1,030 million (+/- $30 million). Non-GAAP gross margin is anticipated to be around 59.5% (+/- 1%). Non-GAAP operating expenses are expected to be nearly $495 million (+/- $5 million).
The company estimates non-GAAP operating margin to be around 11.5% at the midpoint of revenue guidance. Non-GAAP net income is expected to be approximately 27 cents per share (+/- 3 cents), assuming a share count of almost 340 million. For 2020, it expects a non-GAAP tax rate on worldwide earnings to be 19% (+/- 1%).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -19.41% due to these changes.
VGM Scores
Currently, Juniper has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 these revisions indicates a downward shift. Notably, Juniper has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Juniper (JNPR) Down 2.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Juniper Networks (JNPR - Free Report) . Shares have lost about 2.6% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Juniper 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.
Juniper Q4 Earnings Match Estimates, Revenues Rise Y/Y
Juniper reported healthy fourth-quarter 2019 results wherein the top line increased year over year and surpassed the Zacks Consensus Estimate.
The company returned to year-over-year growth during the reported quarter and saw encouraging trends across various areas of its business. These include record Enterprise sales, double-digit year-over-year growth in Cloud, solid momentum in Mist, and strength in its services organization.
Net Income
On a GAAP basis, net income for the December quarter declined to $168.4 million or 49 cents per share from $192.2 million or 55 cents per share in the prior-year quarter, primarily due to lower operating income. For 2019, net income was $345 million or 99 cents per share compared with $566.9 million or $1.60 per share in 2018.
Quarterly non-GAAP net income was $198.7 million or 58 cents per share compared with $205.7 million or 59 cents per share reported a year ago. The bottom line matched the Zacks Consensus Estimate.
Revenues
Fourth-quarter total net revenues were $1,208.1 million (above the midpoint of the company’s guidance) compared with $1,181 million reported in the year-ago quarter. The improvement was driven by the Cloud and Enterprise verticals, which more than offset anticipated weakness within its Service Provider business. The top line surpassed the consensus estimate of $1,190 million. For 2019, revenues declined 4.3% year over year to $4,445.4 million.
Product revenues (comprising Routing, Switching and Security, and accounting for 65.5% of total net revenues) for the quarter increased 2% year over year to $791.9 million backed by strong demand for switching products. Service revenues (accounting for 34.5% of total net revenues) were up 2.9% to $416.2 million. Juniper’s services team continues to execute extremely well with improved attach rates and renewals.
By vertical, net revenues from Cloud business increased 17.8% year over year to $279.8 million, primarily driven by routing and services. Net revenues from Service Provider unit were down 4.6% to $492.5 million. This reflects the ongoing challenges many of the company’s carrier customers are facing. Net revenues from Enterprise business increased to $435.8 million from $427.1 million, driven by switching.
Region wise, net revenues declined to $335.7 million from $344 million in Europe, Middle East, and Africa. Quarterly revenues in the Americas increased 6.6% year over year to $676.8 million. For Asia Pacific, net revenues decreased 3.2% to $195.6 million.
Other Details
Gross profit came in at $719.3 million compared with $710.9 million in the year-ago quarter supported by higher revenues. Total operating expenses increased from $514.1 million to $540.7 million mainly due to rise in sales & marketing, and R&D costs. Operating income was $178.6 million compared with $196.8 million. Non-GAAP operating income declined to $244.7 million from $248.7 million, with margin of 20.3% and 21.1%, respectively.
Concurrent with the results, Juniper communicated that its board of directors has approved a 5% increase in its quarterly cash dividend to 20 cents per share. The distribution is payable on Mar 23, 2020 to shareholders as of Mar 2, 2020.
Cash Flow & Liquidity
In 2019, Juniper generated $528.9 million of net cash from operations compared with $861.1 million in 2018. As of Dec 31, 2019, the computer network equipment maker had $1,215.8 million in cash and equivalents with $1,683.9 million of long-term debt compared with the respective tallies of $2,489 million and $1,789.1 million a year ago.
Q1 Outlook
Juniper has provided its guidance for first-quarter 2020. It expects revenues of $1,030 million (+/- $30 million). Non-GAAP gross margin is anticipated to be around 59.5% (+/- 1%). Non-GAAP operating expenses are expected to be nearly $495 million (+/- $5 million).
The company estimates non-GAAP operating margin to be around 11.5% at the midpoint of revenue guidance. Non-GAAP net income is expected to be approximately 27 cents per share (+/- 3 cents), assuming a share count of almost 340 million. For 2020, it expects a non-GAAP tax rate on worldwide earnings to be 19% (+/- 1%).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -19.41% due to these changes.
VGM Scores
Currently, Juniper has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 these revisions indicates a downward shift. Notably, Juniper has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.