ADTRAN Earnings Meet, Revenues Lag Estimates In Q3

Communication network solution provider, ADTRAN Inc. (ADTN - Analyst Report), posted mixed financial numbers for the third-quarter of 2014. Earnings were on par with the Zacks Consensus Estimate while the top line significantly lagged the same.

The Zacks Rank #5 (Strong Sell) stock posted adjusted earnings per share of 22 cents that came in line with the Zacks Consensus Estimate but declined 24.1% year over year.

On a GAAP basis, the company delivered earnings of 21 cents a share, down 25% from 28 cents in the prior-year quarter.

Total revenue of this Huntsville, Alabama-based company also declined 8.2% to $162.9 million, lagging the Zacks Consensus Estimate of $174 million.

ADTRAN witnessed sequential increase in domestic carrier business. However, the upside was overshadowed by the sluggish performance in the European region and a soft enterprise-spending atmosphere. ADTRAN, however, expects improvement in results from the beginning of 2015 as the company forecasts re-acceleration in carrier expenditure both in the U.S. and Europe.

Gross margin came in at 48%, up 150 basis points year over year. However, operating income registered a steep decline of 27.4% year over year to $12.5 million. Operating margin was 7.7% against 9.7% in the prior-year quarter.

At the end of the third quarter, ADTRAN generated $18 million in cash from operations compared with $22.6 million in third-quarter 2013. The company exited the reported quarter with cash and cash equivalents of $58.4 million, short-term investments of $55.6 million and stockholders’ equity of $566.4 million.

The company’s board of directors declared a cash dividend of 9 cents per share for the quarter which will be paid on Nov 13, 2014 to shareholders of record as of Oct 30.

Other Stocks to Consider

Better-ranked stocks in this industry that warrant a look include Nokia Corporation (NOK - Analyst Report), Calix Inc. (CALX - Snapshot Report) and Aruba Networks, Inc. (ARUN - Snapshot Report). All three carry a Zacks Rank #2 (Buy).