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ARRIS International (ARRS) Up 7% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for ARRIS International PLCARRS . Shares have added nearly 7% in the past month, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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.

ARRIS International Beats Earnings & Revenues in Q1

ARRIS International plc's first-quarter 2017 earnings (excluding special items) of $0.33 per share beat the Zacks Consensus Estimate by a penny. Earnings however declined 19.51% from the year-ago quarter.

Revenues of $1,483.1 million surpassed the Zacks Consensus Estimate of $1,474.5 million. However, the top line declined 8.15% on a year-over-year basis.

ARRIS International plc's first-quarter 2017 earnings (excluding special items) of 33 cents per share beat the Zacks Consensus Estimate by a penny. Earnings however declined 19.51% from the year-ago quarter.

Revenues of $1,483.1 million surpassed the Zacks Consensus Estimate of $1,474.5 million. However, the top line declined 8.15% on a year-over-year basis.

Performance Details

Quarterly gross margin (on an adjusted basis) of the company was 23.1%, compared with 25.8% in the year-ago quarter. Total order backlog at the end of the quarter under review was $1.304 billion, as compared with $1.335 billion at the end of the year-ago quarter. Additionally, book-to-bill ratio was 1.13, compared with 1.24 in the prior-year quarter.

At the end of the first quarter, ARRIS generated cash from operating activities of $250 million, compared with $223 million a year ago. The company exited the first quarter of 2017 with cash resources of approximately $1.217 billion, compared with $1.107 billion at the end of 2016. Long-term debt & financing lease obligations (net of current portion) was $2,159.3 million, compared with approximately $2,180 million at 2016-end.

At the end of the first quarter, ARRIS generated cash from operating activities of $250 million, compared with $223 million a year ago. The company exited the first quarter of 2017 with cash resources of approximately $1.217 billion, compared with $1.107 billion at the end of 2016. Long-term debt & financing lease obligations (net of current portion) was $2,159.3 million, compared with approximately $2,180 million at 2016-end.

Guidance

ARRIS expects earnings (adjusted) in the band of 55-60 cents in the second quarter of 2017. Revenues are expected in the band of $1,640-$1,690 million. For full-year 2017, earnings (adjusted) are expected in the band of $2.40-$2.60 and revenues in the range of $6,615 - $6,830 million.The Zacks Consensus Estimate for the same is pegged at $2.24 on revenues of $6,670 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.

ARRIS International PLC Price and Consensus

ARRIS International PLC Price and Consensus | ARRIS International PLC Quote

VGM Scores

At this time, ARRIS International's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is more suitable for growth than momentum based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Earnings