Why NetApp (NTAP) Stock Is Falling After-Hours Today

NEW YORK (TheStreet) -- NetApp (NTAP) was falling -1% to $34.15 in after-hours trading Wednesday after missing analysts' estimates for revenue in the fiscal fourth quarter and issues a light guidance.

For the fiscal fourth quarter NetApp reported EPS of 84 cents a share, beating the Capital IQ Consensus Estimate of 79 cents a share by 5 cents. Revenue fell -4.7% from the year-ago quarter to $1.64 billion, while analysts expected revenue of $1.67 billion for the quarter.

Looking forward to the fiscal first quarter NetApp expects earnings of 53 cents to 58 cents a share, below analysts' estimates of 62 cents a share. The company expects revenue of $1.42 billion to $1.52 billion for the quarter, compared to analysts' estimates of $1.52 billion.

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TheStreet Ratings team rates NETAPP INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NETAPP INC (NTAP) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."

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

  • Although NTAP's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average. To add to this, NTAP has a quick ratio of 2.33, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for NETAPP INC is rather high; currently it is at 67.45%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, NTAP's net profit margin of 11.93% significantly trails the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Computers & Peripherals industry and the overall market on the basis of return on equity, NETAPP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has declined marginally to $331.80 million or 9.12% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • NTAP has underperformed the S&P 500 Index, declining 9.39% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • You can view the full analysis from the report here: NTAP Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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