Can NetApp Continue Improving Its Share in Enterprise Storage?
@NetApp ( #NTAP) plans to announce its fiscal 3Q18 results on February 14, 2018. Analysts expect NetApp to post revenue of $1.5 billion for the quarter, which ended in January 2018. Wall Street has a low revenue estimate of $1.43 billion and a high estimate of $1.52 billion for the company’s fiscal 3Q18. If NetApp meets the average revenue estimate of $1.5 billion, it would mean a YoY (year-over-year) rise of 6.5% compared to $1.4 billion in fiscal 3Q17. On average, analysts expect NetApp to post non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.91. Analysts have a low estimate of $0.85 and a high estimate of $0.96. In fiscal 3Q17, NetApp reported EPS of $0.82. NetApp beat earnings estimates in the last four quarters As you can see in the chart above, NetApp has beaten analysts’ average EPS estimates in each of the last four quarters. It posted EPS of $0.81 in fiscal 2Q18, beating the estimate of $0.69 by 17.4%. It posted EPS of $0.62, $0.86, and $0.82, respectively, in fiscal 1Q18, fiscal 4Q17, and fiscal 3Q17, beating estimates by 12.7%, 4.9%, and 10.8%, respectively. @NetApp has a market cap of $15 billion. Among its peers, @Western Digital ( #WDC), @Pure Storage ( #PSTG), @Dell Technologies ( #DVMT), and @Seagate (STX) have market caps of $23.9 billion, $4.2 billion, $13.8 billion, and $14 billion, respectively. Will NetApp’s Revenue Continue to Rise in Fiscal 2018 and Beyond? By Adam Rogers Feb 13, 2018 | 8:23 AM Revenue expected to reach $5.8 million in fiscal 2018 Analysts expect NetApp’s (NTAP) revenue to rise 5.3% YoY (year-over-year) to $5.8 billion in fiscal 2018, up from $5.5 billion in fiscal 2017. Analysts also expect the company’s revenue to rise 3.5% YoY to $6.0 billion in fiscal 2019 and 3.8% YoY to $6.3 billion in fiscal 2020. NetApp’s revenue was $6.2 billion in fiscal 2012, $6.3 billion in fiscal 2013, and $6.3 billion in fiscal 2014. The company’s revenue growth was marginal or negative during these years. Revenue fall between fiscal 2016 and 2017 NetApp’s revenue fell to $6.12 billion in fiscal 2015. It fell another 14.8% to $5.54 billion in fiscal 2016 and another 0.5% to $5.51 billion in fiscal 2017. NetApp’s stock price fell between fiscal 2016 and fiscal 2017. Its shares, however, have risen in the last two calendar years. NetApp stock generated a rise of 36% in 2016 and 60% in 2017 due to its revenue growth and margin expansion, which we’ll take a look at in the next part of this series. Analysts expect the revenues of peer companies Western Digital (WDC), Pure Storage (PSTG), IBM (IBM), and Seagate (STX) to rise 7.3%, 39.6%, 1.2%, and 0.7%, respectively, in their coming fiscal years. A Look at NetApp’s Margin and Dividend Yield Expansion By Adam Rogers Feb 13, 2018 | 8:23 AM Gross margin expanded to 64.3% at the end of fiscal 2Q18 NetApp’s (NTAP) non-GAAP (generally accepted accounting principles) gross margin expanded to 64.3% at the end of fiscal 2Q18, up from 62.7% in fiscal 2Q17 and 62.5% in fiscal 2Q16. NetApp’s profit margins have improved significantly since fiscal 2016, during which the company reported a net margin of 4.1% and an operating margin of 13.5%. NetApp’s net margin improved to 9.2% in fiscal 2017 with an operating margin of 17.2%, while its net margin and operating margin are expected to reach 13% and 19.2%, respectively, in fiscal 2018. These figures are expected to improve YoY (year-over-year) in fiscal 2019 and fiscal 2020 as well. We have already seen that analysts expect NetApp’s revenue to rise 6.5% in fiscal 3Q18, 6.1% in fiscal 4Q18, 5.3% in fiscal 2018, and 3.5% in fiscal 2019. Comparatively, its EPS (earnings per share) are expected to rise 11% in fiscal 3Q18, 16.3% in fiscal 4Q18, 22.3% in fiscal 2018, and 9.9% in fiscal 2019. NetApp’s focus on improving its operating efficiency has offset a slow growth environment in the storage solutions industry. Dividend yield NetApp has also looked to improve its dividend yield, thereby increasing its shareholder value, over the last few years. At the end of fiscal 2Q18, NetApp had a dividend yield of 1.4%, or an annual payout of $0.80 per share. NetApp has a dividend payout ratio of 29%, and its dividend yield has risen in the last four years. NetApp’s dividend per share rose from $0.66 in fiscal 2015 to $0.72 in fiscal 2016 and $0.76 in fiscal 2017. The company’s dividend per share is expected to rise to $0.84 in fiscal 2019 and $0.86 in fiscal 2020. Comparatively, the dividend yields of peer companies Western Digital (WDC), IBM (IBM), and Seagate (STX) are 2.5%, 4%, and 5.3%, respectively. Where Does NetApp Stand in the Cloud IT Infrastructure Space? By Adam Rogers Feb 13, 2018 | 8:23 AM Cloud IT infrastructure sales rose 25.5% in 3Q17 Market research company IDC (International Data Corporation) estimated sales of $11.3 billion in the cloud IT (information technology) space, including infrastructure products such as servers, storage, and Ethernet switches, in 3Q17. This expectation reflected a potential rise of 25.5% YoY (year-over-year) compared to sales of $9.0 billion in 3Q16. Public cloud IT infrastructure revenue rose 32.3% YoY to $7.7 billion and accounted for 30.2% of total IT infrastructure spending at the end of 3Q17, up from 26.3% in 3Q16. Comparatively, private cloud revenue rose 13.1% YoY to $3.6 billion in the quarter that ended in September 2017.