Earnings Preview: Will NetApp End Its Share Price Decline?
NetApp (NASDAQ: NTAP), a provider of enterprise data storage hardware and software, is scheduled to report its Q4 2012 earnings after the market closes today.
Analysts expect the company to report earnings per share of around $0.63 and revenues close to $1.68 billion. For Q1 2013, analysts expect earnings per share of $0.59 and revenues of around $1.61 billion.
For a company that could benefit significantly from the frequently cited shift toward cloud computing, NetApp's stock price has declined relatively significantly over the past 12 months. The company's stock has declined around 40% during this period, while competitor EMC (NYSE: EMC) declined around 10.5% and tech giant Google (NASDAQ: GOOG) gained approximately 15%
If NetApp meets analyst estimates for Q4 EPS of $0.63, it would represent growth of about 19% from the same quarter last year, and could set its share price on a better track. The company has met or exceeded consensus analyst expectations for each of its previous four quarters.
IT firm Dell does operate in the data storage segment, but the segment is only around 3% of its revenue as of its last 10-K. So, enterprise data storage was not likely a huge factor in the company's earnings miss yesterday evening. Dell's earnings miss may, however, have put in question IT spending in general – a factor that could have impacted NetApp's fourth quarter.
NetApp currently has a forward price-to-earnings ratio near 12.5, while comparable company EMC's forward price-to-earnings ratio is closer to 13. This difference could be related to NetApp's greater Debt/Equity ratio than EMC.
Shares of NetApp were trading around $1.18, or 3.5% lower for the day.
Disclosure: At the time of this writing, I owned shares of EMC Corporation.
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