How Will Netgear (NTGR) Stock React In After-Market Trading?

NEW YORK (TheStreet) -- Netgear (NTGR) released first quarter earnings after the bell today and net income for the quarter was $22 million, or 59 cents per diluted share, beating analysts estimates by 5 cents.

The company reported a year over year quarterly net revenue increase of 19.1% to $349.4 million, beatings analysts estimates of $344.12 million.

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TheStreet Ratings team rates NETGEAR INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NETGEAR INC (NTGR) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • NTGR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, NTGR has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • NETGEAR INC's earnings per share declined by 26.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NETGEAR INC reported lower earnings of $1.42 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($2.48 versus $1.42).
  • You can view the full analysis from the report here: NTGR Ratings Report
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