A month has gone by since the last earnings report for Itron (ITRI). Shares have added about 15.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Itron 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.
Itron Q1 Earnings Beat Estimates
Itron reported first-quarter 2021 non-GAAP earnings of 52 cents per share, which beat the Zacks Consensus Estimate by 30%. However, the figure declined 8.8% from the year-ago quarter and 20% from the previous quarter.
Revenues were $519.6 million, which lagged the Zacks Consensus Estimate of $536.2 million. Further, the top line decreased 1.1% sequentially and 13% year over year.
The decline in the top line was attributed to the negative impacts of the pandemic on the timing of customer projects. Moreover, the weak performances of Device Solutions and Networked Solutions were concerning.
Notably, product revenues were $442.8 million (85.2% of total revenues), down 16.2% year over year. Service revenues totaled $76.8 million (14.8%), which increased 9.2% from the year-ago quarter.
The company’s bookings were $688 million and the backlog totaled $3.4 billion at the end of the reported quarter.
Segments in Detail
Device Solutions: The company generated revenues of $172.8 million (33.2% of total revenues) from the segment, down 15% from the year-ago quarter.
Networked Solutions: Revenues from the segment were $288.3 million (55.5% of total revenues), down 15% year over year.
Outcomes: The segment generated revenues of $58.5 million (11.3% of total revenues), up 6% on a year-over-year basis.
For the first quarter, Itron’s gross margin was 32.2%, which expanded 350 basis points (bps) on a year-over-year basis. This was driven by operational efficiency and a favorable product mix.
Non-GAAP operating expenses were $128.1 million, down 3.7% year over year.
Further, non-GAAP operating margin was 7.5%, expanding 110 bps from the year-ago quarter.
Balance Sheet & Cash Flows
As of Mar 31, 2021, cash and cash equivalents totaled $574.6 million, up from $206.9 million as of Dec 31, 2020. Accounts receivables were $365.8 million, down from $369.8 million in the prior quarter.
Long-term debt at the end of the first quarter stood at $496.5 million compared with $902.6 million at the end of the fourth quarter of 2020.
Itron generated $49.9 million of cash from operations in the first quarter compared with $38.9 million in the prior quarter.
Moreover, it generated a free cash flow of $39 million in the quarter under review compared with 29.03 million in the last reported quarter.
For 2021, the company changed non-GAAP earnings guidance from $2.15-$2.55 per share to $2.30-$2.70.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
At this time, Itron has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Itron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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