Why Is ADTRAN Holdings (ADTN) Up 4.7% Since Last Earnings Report?
A month has gone by since the last earnings report for ADTRAN Holdings (ADTN). Shares have added about 4.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ADTRAN Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ADTRAN Q3 Earnings Miss Despite Higher Revenues
ADTRAN reported relatively modest third-quarter 2022 results, wherein the bottom line missed the Zacks Consensus Estimate but the top line beat the same.
On a GAAP basis, net loss in the September quarter was $41.9 million or a loss of 57 cents per share compared with a loss of $10.4 million or a loss of 21 cents per share in the prior-year quarter. The year-over-year decline despite higher revenues was primarily due to higher cost of revenues and operating expenses.
Non-GAAP net income was $7.7 million or 11 cents per share against non-GAAP net loss of $0.8 million or loss of 2 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 18 cents.
Quarterly total revenues more than doubled to $340.7 million from $138.1 million in the prior-year quarter, driven by the increasing demand for ADTRAN’s network solutions and fiber broadband products. The top line beat the consensus estimate of $330 million.
Revenues from Network Solutions were $304.9 million compared with $120.8 million in the year-ago quarter with incremental contribution from ADVA.ADTRAN completed the buyout of ADVA in July. The company recorded healthy demand trends driven by the accelerated expansion of fiber-to-the-home networks, upgrades to in-home WiFi connectivity and the adoption of cloud-based automation tools. The solid quarterly performance was further buoyed by improved customer diversification and end-to-end fiber broadband solutions. Services and Support revenues were $35.8 million, up from $17.3 million.
Total cost of sales increased from $90.4 million to $237.7 million. GAAP gross profit came in at $103 million compared with $47.7 million in the prior-year quarter. Operating loss in the quarter was $48 million compared with $10.1 million in the year-ago quarter.
Cash Flow & Liquidity
During the first nine months of 2022, ADTRAN used $42.7 million of cash in operating activities against an operating cash flow of $28.9 million in the prior-year period. As of Sep 30, 2022, the company had $111.1 million in cash and cash equivalents with $25.4 million of deferred compensation liability.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -40.91% due to these changes.
Currently, ADTRAN Holdings has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise ADTRAN Holdings has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
ADTRAN Holdings belongs to the Zacks Technology Services industry. Another stock from the same industry, IQVIA Holdings (IQV), has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
IQVIA reported revenues of $3.56 billion in the last reported quarter, representing a year-over-year change of +5%. EPS of $2.48 for the same period compares with $2.17 a year ago.
IQVIA is expected to post earnings of $2.76 per share for the current quarter, representing a year-over-year change of +8.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for IQVIA. Also, the stock has a VGM Score of A.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ADTRAN Holdings, Inc. (ADTN) : Free Stock Analysis Report
IQVIA Holdings Inc. (IQV) : Free Stock Analysis Report
To read this article on Zacks.com click here.