ADTRAN Second Quarter Earnings Sneak Peek

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ADTRAN, Inc. (NASDAQ:ADTN) will unveil its latest earnings on Wednesday, July 11, 2012. Adtran designs, manufactures, markets, and services network access solutions for communications networks.

ADTRAN, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of 36 cents per share, a decline of 35.7% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 44 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 36 cents during the last month. Analysts are projecting profit to rise by 25% versus last year to $1.59.

Past Earnings Performance: The company is looking to beat analyst estimates for the third quarter in a row. Last quarter, it beat estimates with profit of 22 cents per share against the mean estimate of 20 cents. In the prior quarter, the company reported net income of 48 cents.

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A Look Back: In the first quarter, profit fell 62.2% to $13 million (20 cents a share) from $34.3 million (52 cents a share) the year earlier, but exceeded analyst expectations. Revenue fell 18.6% to $134.7 million from $165.5 million.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 5.5 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 6.32 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 15.3% to $71.4 million while assets rose 0.5% to $393.1 million.

Wall St. Revenue Expectations: On average, analysts predict $190.3 million in revenue this quarter, a rise of 3.3% from the year-ago quarter. Analysts are forecasting total revenue of $771.3 million for the year, a rise of 7.5% from last year’s revenue of $717.2 million.

Key Stats:

On the top line, the company is looking to get back on the right track after last quarter’s drop snapped a string of revenue increases. Revenue rose 22.5% in the second quarter of the last fiscal year, 17.9% in the third quarter of the last fiscal year and 6%in the fourth quarter of the last fiscal year before dropping in the first quarter.

An income boost this time around would be welcome news after profit declines in the past two quarters. Net income dropped 13.3% in the fourth quarter of the last fiscal year and then again in the first quarter.

Stock Price Performance: Between April 10, 2012 and July 5, 2012, the stock price rose 93 cents (3.3%), from $28.47 to $29.40. The stock price saw one of its best stretches over the last year between June 14, 2012 and June 20, 2012, when shares rose for five straight days, increasing 6.3% (+$1.82) over that span. It saw one of its worst periods between November 15, 2011 and November 25, 2011 when shares fell for eight straight days, dropping 13.1% (-$4.50) over that span.

Analyst Ratings: With six analysts rating the stock as a buy, one rating it as a sell and seven rating it as a hold, there are indications of a bullish outlook.

Competitors to Watch: Calix, Inc., Cisco Systems, Tellabs, Inc., Alcatel-Lucent, Telefonaktiebolaget LM Ericsson (ADR), Sycamore Networks, Inc., Juniper Networks, Ciena Corporation, Extreme Networks, Inc, and Westell Technologies Inc.

(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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