A month has gone by since the last earnings report for Adtran (ADTN). Shares have added about 14.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Adtran 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 catalysts.
ADTRAN Q1 Earnings & Revenues Top Estimates, Rise Y/Y
ADTRAN reported solid first-quarter 2021 results, wherein both the bottom and the top lines beat the respective Zacks Consensus Estimate. This networking equipment maker saw record product order bookings in the quarter.
On a GAAP basis, net income in the March quarter was $0.9 million or 2 cents per share against a net loss of $10 million or loss of 21 cents per share in the prior-year quarter. The significant improvement was largely driven by narrower operating loss and a gain from investments.
Non-GAAP net income came in at $6.3 million or 13 cents per share against a net loss of $2.2 million or loss of 5 cents per share in the year-ago quarter. Also, the bottom line beat the Zacks Consensus Estimate by 9 cents.
Quarterly total revenues grew to $127.5 million from $114.5 million in the prior-year quarter, reflecting the increased demand for ADTRAN’s network solutions. Also, the top line surpassed the consensus estimate of $126 million.
The company’s business continues to be driven by strong demand for its fiber access platforms, in-home service delivery platforms and software platforms with regional service providers across the United States and Europe.
Sales of network solutions were $113.8 million compared with $97.4 million in the year-ago quarter. ADTRAN’s end-to-end solutions simplify the deployment of fiber-based broadband services and provide a better customer experience. Services and support sales were $13.7 million, down from $17.2 million.
The total cost of sales increased from $62.9 million to $73.9 million. Gross profit came in at $53.6 million compared with $51.6 million in the prior-year quarter. Operating loss in the quarter was $1.3 million compared with a loss of $4.9 million in the year-ago quarter.
The company announced that its board of directors approved a cash dividend of 9 cents per share for the first quarter of 2021. The amount is payable on Jun 3 to shareholders on record as of May 20.
Cash Flow & Liquidity
During the first quarter, ADTRAN generated $10.7 million of net cash from operating activities. As of Mar 31, 2021, the company had $63.8 million in cash and cash equivalents with $26.7 million of deferred compensation liability compared with the respective tallies of $60.2 million and $25.9 million at the end of the previous quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 152.17% due to these changes.
At this time, Adtran has a nice Growth Score of B, a grade with the same score on the momentum front. 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.
Adtran has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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