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Netgear (NTGR) Q1 Earnings: Is a Surprise in the Cards?

Netgear Inc. NTGR is set to report first-quarter 2017 results on Apr 26. Last quarter, the company posted a positive earnings surprise of 15.15%, with an average positive earnings surprise of 17.52% in the last four quarters.

Let's see how things are shaping up for this announcement.

Factors to Consider

Netgear designs technologically advanced, branded networking products that address the specific needs of small businesses and home users. A strong product portfolio, comprising offerings like Arlo smart home security-cameras and Nighthawk routers and gateways, are anticipated to boost the top line.

We believe that Netgear's strength in retail business will primarily drive results. Region wise, North America continues to be strong. In the fourth quarter, revenues from retail units grew 21.7%, while the same from North America grew 9.5%.

However, the service provider business continues to pose challenges with the company streamlining this segment. In the fourth quarter, segment revenues plunged as much as 48.5% year over year.

For the first quarter, the company expects revenues of $300-$315 million. Non- GAAP operating margin is expected to be around 9.5-10.5%.

NETGEAR, Inc. Price and EPS Surprise

NETGEAR, Inc. Price and EPS Surprise | NETGEAR, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Netgear is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP: Netgear currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 51 cents per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Netgear has a Zacks Rank #3. Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Teradyne, Inc. TER has an Earnings ESP of +2.63% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Seagate Technology plc STX has an Earnings ESP of +3.77% and a Zacks Rank #2.

Fiserv, Inc. FISV has an Earnings ESP of +0.85% and a Zacks Rank #2.

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NETGEAR, Inc. (NTGR): Free Stock Analysis Report

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Fiserv, Inc. (FISV): Free Stock Analysis Report

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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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