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Software Industry Shifts: Citrix Systems, Qualcomm, and Waymo

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Part 18
Software Industry Shifts: Citrix Systems, Qualcomm, and Waymo PART 18 OF 18

How NetApp’s Fiscal 4Q17 Results Impacted Its Fiscal 1Q18 Outlook

Tepid guidance sparks selloff

NetApp (NTAP) stock saw a brief selloff and equity rating downgrades after its management provided fiscal 1Q181 guidance below the consensus estimate. Did the market overreact to NetApp’s outlook? 

NetApp is expecting its fiscal 1Q18 revenues to range from $1.2 billion–$1.4 billion. However, the consensus estimate called for revenues of $1.3 billion. Coming to the bottom line, NetApp’s management expects adjusted EPS (earnings per share) between $0.49–$0.57. The company’s earnings guidance falls below the consensus EPS estimate of $0.66.

How NetApp’s Fiscal 4Q17 Results Impacted Its Fiscal 1Q18 Outlook

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NetApp’s adjusted EPS

In its just-reported fiscal 4Q172 results, NetApp posted adjusted EPS of $0.86, up from $0.55 in fiscal 4Q16 and above the consensus estimate of $0.82. 

Its revenues of ~$1.5 billion rose from ~$1.4 billion a year earlier and topped the consensus estimate of ~$1.4 billion. The chart above shows NetApp’s top-line trend for the last five quarters.

Looking back over the trailing 12 months, NetApp has topped EPS expectations in the last four quarters, while its revenues have surpassed expectations in three of the last four quarters.

Favorable market conditions

For storage companies like NetApp, Pure Storage (PSTG), Western Digital (WDC), IBM (IBM), and Seagate Technology (STX), technology trends such as the Internet of Things and cloud computing seem to improve the sector’s market conditions.

  1. fiscal 1Q18 ending July 31, 2017
  2. fiscal 4Q18 ended April 30, 2017
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