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NETGEAR (NTGR) Q4 Earnings & Revenues Beat Estimates, Up Y/Y

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Zacks Equity Research
·4 min read
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NETGEAR, Inc. NTGR reported solid fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.

Net Income

On a GAAP basis, net income was $30.9 million or 99 cents per share against net loss of $0.4 million or loss of 1 cent per share in the year-ago quarter. The improvement primarily resulted from operating income.

Quarterly non-GAAP net income was $40 million or 99 cents per share compared with $10.4 million or 34 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 13 cents, delivering a surprise of 15.1%.

NETGEAR, Inc. Price, Consensus and EPS Surprise

NETGEAR, Inc. Price, Consensus and EPS Surprise
NETGEAR, Inc. Price, Consensus and EPS Surprise

NETGEAR, Inc. price-consensus-eps-surprise-chart | NETGEAR, Inc. Quote

In 2020, net income was $58.3 million or $1.90 per share compared with $25.8 million or 81 cents per share in 2019.

Revenues

NETGEAR generated revenues of $367.1 million, up 45.1% year over year. The performance was primarily driven by strong demand for its Wi-Fi 6 offerings, which drove exceptional growth in the connected home products (CHP) business. The top line surpassed the consensus estimate of $348 million.

Region wise, revenues from the Americas were $259.6 million (71% of total revenues), up 53.3% year over year. EMEA revenues were $67.5 million (18%), up 33.6%. APAC revenues grew 19.9% to $40 million (11%). Significant growth in the regions can be attributed to higher demand of CHP products in retail and service provider channels, fueled by the work-from-home trend.

In 2020, revenues increased 25.7% year over year to $1,255.2 million.

Quarterly Segment Results

Connected Home, which includes Nighthawk, Orbi, Nighthawk Pro Gaming and Meural brands, generated revenues of $296.1 million, up 61.7% year over year. This resulted from strong product demand in both the retail and service provider channels.

Revenues from SMB improved 2.7% year over year to $70.9 million. High performance ProAV and work-from-home solutions, with leading-edge Wi-Fi access points plus plug-and-play switches performed well.

Other Details

Operating income was $33.8 million against an operating loss of $0.2 million in the year-ago quarter. Non-GAAP gross margin increased to 30.6% from 27.9%. Non-GAAP operating margin was 11% compared with 4.4% in the prior-year quarter.

Cash Flow & Liquidity

During the fourth quarter, NETGEAR generated $46.1 million in cash from operations.

As of Dec 31, 2020, the company had $346.5 million in cash and cash equivalents with $25.5 million of non-current operating lease liabilities. This compares with the respective tallies of $190.2 million and $25.4 million a year ago.

Q1 Outlook

For the first quarter of 2021, NETGEAR anticipates revenues in the range of $300 million to $315 million. GAAP operating margin is estimated between 4.5% and 5.5%. Non-GAAP operating margin is expected between 8% and 9%.

Zacks Rank & Other Stocks to Consider

NETGEAR currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the broader industry are Airgain AIRG, Knowles KN and U.S. Cellular USM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Airgain delivered a trailing four-quarter positive earnings surprise of 62.5%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.

Knowles delivered a trailing four-quarter positive earnings surprise of 12.5%, on average.

U.S. Cellular delivered a trailing four-quarter positive earnings surprise of 231.1%, on average.

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