Why Is Itron (ITRI) Down 1.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Itron (ITRI). Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Itron due for a breakout? 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 catalysts.
Itron Q4 Earnings & Revenues Beat Estimates
Itron reported non-GAAP earnings per share (EPS) of $1.23 in fourth-quarter 2023, which surpassed the Zacks Consensus Estimate by 64%. The company reported earnings of 71 cents in the prior-year quarter.
Revenues were $577.2 million, which beat the Zacks Consensus Estimate by 1.1%. The top line improved 23% year over year.
The top-line performance was driven by strong operational execution and easing of supply-chain issues.
Product revenues were $502 million (87% of total revenues), up 27.8% year over year. Service revenues totaled $75.2 million (13%), up 0.5% from the year-ago levels.
Itron’s bookings were $839 million, and its backlog amounted to $4.5 billion at the end of the reported quarter.
Segments in Detail
Device Solutions: Revenues generated from this segment were $114 million (19.8% of total revenues), up 13% from the year-ago quarter due to higher demand for smart water meter and communication module sales. Our estimate was pegged at $118.2 million.
Networked Solutions: Segmental revenues totaled $391 million (67.7%), up 30% year over year, driven by solid factory output enabled by improved component supply. We suggested the metric to be $379 million.
Outcomes: The segment’s revenues of $73 million (12.5%) improved 10% on a year-over-year basis due to higher recurring and one-time services revenues. Our projection was $72.5 million.
Operating Details
Itron’s gross margin in the fourth quarter was 34%, which expanded 390 basis points on a year-over-year basis. Favorable mix and operational efficiency resulted in the uptick.
Non-GAAP operating expenses of $135.5 million jumped 17.3% year over year, primarily due to higher research and development costs.
Non-GAAP operating income was $60.9 million compared with $25.3 million in the year-ago period. The upside was driven by higher gross profit.
Balance Sheet & Cash Flows
As of Dec 31, 2023, cash and cash equivalents totaled $302 million, up from $254.8 million as of Sep 30. Accounts receivables were $303.8 million compared with $318.1 million in the prior quarter.
As of Dec 31, net long-term debt was $454.8 million compared with $454.3 million as of Sep 30, 2023.
Itron generated $47.9 million of cash from operations in the reported quarter against $13 million cash outflow from operations in the prior-year quarter.
Free cash flow was $39.3 million against $17.9 million free cash outflow in the year-ago period.
Guidance
For the first quarter of 2024, ITRI expects revenues between $575 million and $585 million.
Non-GAAP EPS is anticipated to be in the range of 80-90 cents.
For 2024, management projects revenues between $2.275 billion and $2.375 billion. Non-GAAP EPS is estimated to be in the band of $3.40-$3.80.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 43.45% due to these changes.
VGM Scores
At this time, Itron has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Itron has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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
Itron, Inc. (ITRI) : Free Stock Analysis Report
