Smith Micro Q3 Loss Narrower Than Expected, Revenues Lag

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.

In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.

However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Badger Meter (BMI) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Here are three of the most important factors that make the stock of this manufacturer of products that measure gas and water flow a great growth pick right now.

Earnings Growth

Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Badger Meter is 21.1%, investors should actually focus on the projected growth. The company's EPS is expected to grow 33.4% this year, crushing the industry average, which calls for EPS growth of 5.7%.

Impressive Asset Utilization Ratio

Asset utilization ratio -- also known as sales-to-total-assets (S/TA) ratio -- is often overlooked by investors, but it is an important indicator in growth investing. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.

Right now, Badger Meter has an S/TA ratio of 1.06, which means that the company gets $1.06 in sales for each dollar in assets. Comparing this to the industry average of 0.72, it can be said that the company is more efficient.

While the level of efficiency in generating sales matters a lot, so does the sales growth of a company. And Badger Meter looks attractive from a sales growth perspective as well. The company's sales are expected to grow 16.6% this year versus the industry average of 0.4%.

Promising Earnings Estimate Revisions

Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The current-year earnings estimates for Badger Meter have been revising upward. The Zacks Consensus Estimate for the current year has surged 2.1% over the past month.

Bottom Line

Badger Meter has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.

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

This combination positions Badger Meter well for outperformance, so growth investors may want to bet on it.

Zacks Investment Research

For those looking to find strong Computer and Technology stocks, it is prudent to search for companies in the group that are outperforming their peers. Has Badger Meter (BMI) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.

Badger Meter is a member of the Computer and Technology sector. This group includes 619 individual stocks and currently holds a Zacks Sector Rank of #2. The Zacks Sector Rank considers 16 different sector groups. The average Zacks Rank of the individual stocks within the groups is measured, and the sectors are listed from best to worst.

The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. Badger Meter is currently sporting a Zacks Rank of #2 (Buy).

Over the past three months, the Zacks Consensus Estimate for BMI's full-year earnings has moved 3.2% higher. This shows that analyst sentiment has improved and the company's earnings outlook is stronger.

Based on the most recent data, BMI has returned 45.8% so far this year. Meanwhile, stocks in the Computer and Technology group have gained about 31% on average. This means that Badger Meter is performing better than its sector in terms of year-to-date returns.

Another stock in the Computer and Technology sector, Blend Labs (BLND), has outperformed the sector so far this year. The stock's year-to-date return is 78.4%.

For Blend Labs, the consensus EPS estimate for the current year has increased 29.6% over the past three months. The stock currently has a Zacks Rank #2 (Buy).

Looking more specifically, Badger Meter belongs to the Instruments - Control industry, which includes 6 individual stocks and currently sits at #223 in the Zacks Industry Rank. This group has gained an average of 6.6% so far this year, so BMI is performing better in this area.

On the other hand, Blend Labs belongs to the Internet - Software industry. This 145-stock industry is currently ranked #45. The industry has moved +31.6% year to date.

Investors interested in the Computer and Technology sector may want to keep a close eye on Badger Meter and Blend Labs as they attempt to continue their solid performance.

Zacks Investment Research

EchoStar Corporation SATS reported a third-quarter 2024 non-GAAP loss of 52 cents per share compared with a loss of 51 cents in the prior-year quarter. The bottom line was wider than the Zacks Consensus Estimate of a loss of 28 cents by 85.7%.

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

Revenues in the quarter totaled $3.9 billion, down 5% year over year. The top line missed the consensus mark by 1.5%. Net subscriber losses in Pay-TV and Broadband and satellite services led to the contraction. However, steady growth in Retail Wireless and 5G Network Deployment businesses is a tailwind.

In response to the results, SATS’ shares plummeted 12.9%, and the trading session closed at $22.76 on Nov. 12. Shares of the company have gained 133.7% compared to the sub-industry’s rise of 18.2% in the past year.

Segmental Details

In the reported quarter, revenues from the Pay-TV segment were down 6.7% year over year to $2.62 billion. In the third quarter, SATS experienced a net decline of roughly 43,000 pay-TV subscribers, a notable improvement from the loss of 64,000 subscribers in the previous year’s quarter. A key factor in this improvement was the increase in SLING TV subscribers, which grew by 145,000, surpassing the 117,000 additions in the prior year quarter.

EchoStar now has 8.03 million pay-TV subscribers, which includes 5.89 million DISH TV and 2.14 million SLING TV customers. The surge in SLING TV subscriptions and lower churn in DISH TV helped offset fewer new DISH TV activations.

Retail Wireless category ended the quarter with 6.98 million subscribers and reported $896 million in net sales, up 0.5% year over year. The segment saw a net decrease of nearly 297,000 subscribers in the third quarter compared with a decline of 225,000 in the year-ago period. The lower net subscriber losses were due to a reduction in churn rates. The segment was adversely impacted by net losses from government-subsidized subscribers, particularly due to the Affordable Connectivity Program funding closure on June 1, 2024. Excluding these losses, the company added approximately 62,000 Retail Wireless subscribers during the quarter.

EchoStar Corporation Price, Consensus and EPS Surprise

EchoStar Corporation price-consensus-eps-surprise-chart | EchoStar Corporation Quote

Revenues from Broadband and Satellite Services were $386.7 million compared with $413 million in the prior-year quarter. Subscribers declined by 43,000 in the third quarter, an improvement from the 59,000 loss reported in the prior-year period. The net loss reduction is attributed to the successful launch of the EchoStar XXIV (Jupiter 3) satellite, which enhanced service offerings and attracted new customers. However, the conclusion of the ACP program on June 1, 2024, hurt broadband satellite subscriber growth.

Net sales from 5G Network Deployment increased to $43.2 million from $29.9 million a year ago.

Other Details

Operating income before depreciation and amortization (OIBDA) was $316.7 million in the third quarter compared with $365.9 million in the year-ago quarter.

OIBDA for PayTV was $676 million compared with $675.6 million a year ago.

OIBDA for Broadband and Satellite Services was $77.5 million, down 31.4% year over year.

OIBDA loss for Retail Wireless was $90.8 million compared with a loss of $105.6 million in the prior-year period.

OIBDA loss for 5G Network Deployment was $330.7 million compared with a loss of $299.2 million a year ago.

Balance Sheet

As of Sept. 30, 2024, SATS had total cash and cash equivalents of $622.6 million compared with $419.2 million as of June 30, 2024.

For the nine months ended Sept. 2024, SATS generated $1.2 billion of cash from operating activities compared with $2.02 billion in the year-ago period.

SATS’ Zacks Rank

Currently, EchoStar carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Iridium Communications IRDM reported an EPS of 21 cents for the third quarter of 2024, beating the Zacks Consensus Estimate by 5%. The company incurred a loss of 1 cent per share in the prior year quarter.

Shares of IRDM lost 16.1% in the past year.

Itron Inc ITRI reported non-GAAP EPS of $1.84 for third-quarter 2024, which beat the Zacks Consensus Estimate by 62.8%. The company reported earnings of 98 cents in the prior-year quarter.

Shares of ITRI surged 90.8% in the past year.

Watts Water Technologies, Inc. WTS reported third-quarter 2024 adjusted EPS of $2.03 compared with $2.04 in the prior-year quarter. The bottom line topped the Zacks Consensus Estimate by 2%.

Shares of WTS have gained 10.4% in the past year.

Zacks Investment Research

Seagate Technology Holdings plc STX shares have been performing well on the trading front, with the stock gaining 33.7% in the past year compared with the sub-industry’s growth of 32.7%.

The uptrend is driven by Seagate’s impressive top-line performance in the past few quarters. The company is witnessing an increasing demand for its mass capacity solutions. STX’s earnings beat estimates in all of the last four quarters, delivering an average surprise of 85.1%.

One-Year Price Performance

DHI Group (DHX) came out with quarterly earnings of $0.05 per share, beating the Zacks Consensus Estimate of $0.04 per share. This compares to earnings of $0.03 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 25%. A quarter ago, it was expected that this provider of websites and career fairs for professionals would post earnings of $0.04 per share when it actually produced earnings of $0.06, delivering a surprise of 50%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

DHI Group, which belongs to the Zacks Internet - Content industry, posted revenues of $35.28 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.11%. This compares to year-ago revenues of $37.43 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

DHI Group shares have lost about 29.3% since the beginning of the year versus the S&P 500's gain of 25.8%.

What's Next for DHI Group?

While DHI Group has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for DHI Group: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.04 on $36.18 million in revenues for the coming quarter and $0.20 on $143.28 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Content is currently in the top 35% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Smith Micro Software, Inc. (SMSI), another stock in the broader Zacks Computer and Technology sector, has yet to report results for the quarter ended September 2024. The results are expected to be released on November 13.

This company is expected to post quarterly loss of $0.31 per share in its upcoming report, which represents a year-over-year change of -487.5%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Smith Micro Software, Inc.'s revenues are expected to be $4.8 million, down 56.4% from the year-ago quarter.

Zacks Investment Research