Dj Dir Waechter Sells 2183 Of Netgear Inc >Ntgr

Here are five stocks added to the Zacks Rank #1 (Strong Buy) List today:

Sappi Limited SPPJY: This wood fiber-based renewable resources company has seen the Zacks Consensus Estimate for its current year earnings increasing 16.7% over the last 60 days.

Sappi Ltd. Price and Consensus

Sappi Ltd. price-consensus-chart | Sappi Ltd. Quote

Flushing Financial Corporation FFIC: This bank holding company for Flushing Bank has seen the Zacks Consensus Estimate for its current year earnings increasing 5.6% over the last 60 days.

Flushing Financial Corporation Price and Consensus

Flushing Financial Corporation price-consensus-chart | Flushing Financial Corporation Quote

CorMedix Inc. CRMD: This biopharmaceutical company has seen the Zacks Consensus Estimate for its current year earnings increasing 20.7% over the last 60 days.

CorMedix Inc Price and Consensus

CorMedix Inc price-consensus-chart | CorMedix Inc Quote

NETGEAR, Inc. NTGR: This connectivity solutions provider has seen the Zacks Consensus Estimate for its current year earnings increasing 20.6% over the last 60 days.

NETGEAR, Inc. Price and Consensus

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

AAC Technologies Holdings Inc. AACAY: This investment holding company has seen the Zacks Consensus Estimate for its current year earnings increasing 11.1% over the last 60 days.

AAC Technologies Holdings Inc. Price and Consensus

AAC Technologies Holdings Inc. price-consensus-chart | AAC Technologies Holdings Inc. Quote

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research

Have you evaluated the performance of NETGEAR, Inc.'s (NTGR) international operations during the quarter that concluded in September 2024? Considering the extensive worldwide presence of this company, analyzing the patterns in international revenues is crucial for understanding its financial resilience and potential for growth.

In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth trajectory. For investors, understanding a company's reliance on overseas markets has become increasingly crucial, as it offers insights into the company's sustainability of earnings, ability to tap into diverse economic cycles and overall growth potential.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

Our review of NTGR's last quarterly performance uncovered some notable trends in the revenue contributions from its international markets, which are commonly analyzed and tracked by Wall Street experts.

The company's total revenue for the quarter amounted to $182.85 million, showing decrease of 7.6%. We will now explore the breakdown of NTGR's overseas revenue to assess the impact of its international operations.

Trends in NTGR's Revenue from International Markets

Of the total revenue, $22.3 million came from APAC during the last fiscal quarter, accounting for 12.20%. This represented a surprise of +0.42% as analysts had expected the region to contribute $22.21 million to the total revenue. In comparison, the region contributed $21.04 million, or 14.62%, and $21.14 million, or 10.69%, to total revenue in the previous and year-ago quarters, respectively.

During the quarter, EMEA contributed $32.8 million in revenue, making up 17.94% of the total revenue. When compared to the consensus estimate of $31.67 million, this meant a surprise of +3.56%. Looking back, EMEA contributed $27.36 million, or 19.01%, in the previous quarter, and $35.68 million, or 18.04%, in the same quarter of the previous year.

Projected Revenues in Foreign Markets

For the current fiscal quarter, it is anticipated by Wall Street analysts that NETGEAR will report a total revenue of $167.47 million, which reflects a decline of 11.2% from the same quarter in the previous year. The revenue contributions are expected to be 14.4% from APAC ($24.04 million) and 19.8% from EMEA ($33.1 million).

For the full year, the company is expected to generate $652.8 million in total revenue, down 11.9% from the previous year. Revenues from APAC and EMEA are expected to constitute 13.9% ($90.76 million) and 18.9% ($123.31 million) of the total, respectively.

Key Takeaways

NETGEAR's leaning on foreign markets for its revenue stream presents a mix of chances and challenges. Therefore, a vigilant watch on its international revenue movements can greatly aid in projecting the company's future direction.

In a world where international interdependencies and geopolitical conflicts are ever-increasing, Wall Street analysts closely monitor these trends for companies having international presence to adjust their earnings forecasts. Of course, there are several other factors, including a company's standing within its home borders, that influence analysts' earnings forecasts.

Emphasizing a company's shifting earnings prospects is a key aspect of our approach at Zacks, especially since research has proven its substantial influence on a stock's price in the short run. This correlation is positively aligned, meaning that improved earnings projections tend to boost the stock's price.

The Zacks Rank, our proprietary stock rating tool, comes with an externally validated impressive track record. It effectively utilizes shifts in earnings projections to act as a dependable barometer for forecasting short-term stock price trends.

At present, NETGEAR holds a Zacks Rank #1 (Strong Buy). This ranking implies that its near-term performance might beat the overall market movement. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here

A Review of NETGEAR's Recent Stock Market Performance

Over the preceding four weeks, the stock's value has appreciated by 18%, against an upturn of 0.4% in the Zacks S&P 500 composite. In parallel, the Zacks Computer and Technology sector, which counts NETGEAR among its entities, has appreciated by 2.1%. Over the past three months, the company's shares have seen an increase of 50% versus the S&P 500's 5.5% increase. The sector overall has witnessed an increase of 5.5% over the same period.

Zacks Investment Research

NETGEAR, Inc. NTGR reported third-quarter 2024 non-GAAP earnings of 17 cents per share, which beat the Zacks Consensus Estimate of a loss of 4 cents. The company had reported non-GAAP earnings of 23 cents in the year-ago quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

NETGEAR generated net revenues of $182.9 million, beating the consensus estimate by 4.5%. The figure also beat the guidance of $170- $180 million. Revenues improved 27.1% sequentially. But the metric was down 7.6% on a year-over-year basis. The company completed a successful destocking plan, leading to a $27 million reduction in inventory in the third quarter. This is expected to help NTGR to align sell-in with sell-through with channel partners, thereby increasing revenue predictability. NETGEAR also witnessed a 22% spike in recurring revenues in the quarter under review. It now has 555,000 recurring subscribers.

Region-wise, net revenues from the Americas were $127.8 million (70% of total revenues), down 9.4% year over year. Europe, the Middle East and Africa generated revenues (18%) of $32.8 million, down 8.1%. Revenues from the Asia Pacific region (12%) increased 5.5% year over year to $22.3 million.

NETGEAR, Inc. Price, Consensus and EPS Surprise

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

NETGEAR’s Segmental Details

Connected Home or CHP segment (which includes Orbi, Nighthawk and Armor brands) generated revenues of $104.3 million, down 18.1% year over year but up 24.1% sequentially. The segment continues to witness strength in the premium products portfolio and saw positive demand trends for new M7 Pro mobile hotspots and Nighthawk products. Revenues from the Service provider channel were $22.9 million, gaining from the earlier launch of M7 Pro mobile hotspots.

Driven by ongoing momentum for ProAV managed switch products (which grew in double digits year over year), revenues from NETGEAR for Business (NFB) jumped 11.4% year over year and 31.2% sequentially to $78.5 million.

Adjusted gross margin decreased to 31.1% from 35% year over year. Non-GAAP operating income was $1.6 million compared with operating income of $5.3 million in the year-ago quarter.

Non-GAAP operating expenses were $55.3 million, down 13.7%.

NTGR’s Cash Flow & Liquidity

For the quarter ended Sept. 29, 2024, NETGEAR generated $107.7 million in cash from operations.

It also had $395.7 million in cash and cash equivalents and short-term investments and $271.4 million of total current liabilities. The strong cash balance was driven by a litigation settlement with TP-Link.

NTGR repurchased 99,000 shares worth $1.5 million in the quarter under review due to trading restrictions. The company has 3.8 million shares left under existing authorization and it expects to resume buyback in the fourth quarter.

NTGR’s Q4 Guidance

Management projects net revenues in the band of $160-$175 million. The company expects to see more predictable performance following the completion of destocking for NFB and CHP businesses. NETGEAR added that while the market is showing signs of recovery, the company expects higher promotional activity due to the holiday season within the retail business for its CHP segment.

It anticipates revenues from the service provider channel to be nearly $20 million in the fourth quarter, slightly down sequentially, owing to the earlier launch of the M7 Pro mobile hotspot.

Gross margins and operating margins are likely to remain affected by ongoing inventory reduction efforts and elevated transportation costs, including those related to the Red Sea shipping crisis.

GAAP operating margin is forecasted to be between (12.4)% and (9.4)%. Non-GAAP operating margin is estimated in the band of (8)-(5)%.

GAAP tax benefit is expected to be between $2 million and $3 million, with a non-GAAP tax benefit projected to be between breakeven and $1 million for the fourth quarter of 2024.

Zacks Rank of NTGR

NETGEAR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The stock has surged 63.6% compared with sub-industry’s gain of 6.2% in the past year.