ADTRAN Tops Q4 Earnings, Revenues on Segmental Strength

Communication network solution provider, ADTRAN Inc. (ADTN) reported fourth-quarter 2014 financial results wherein both the top and the bottom lines surpassed the Zacks Consensus Estimate.

In the fourth quarter, GAAP net income was $9.3 million or 17 cents a share compared with $11.8 million or 20 cents in the year-ago quarter. However, quarterly adjusted earnings per share of 15 cents were significantly higher than the Zacks Consensus Estimate of 7 cents. The company reported quarterly total revenue of $144 million, down 8.9% year over year, but above the Zacks Consensus Estimate of $141 million.

Quarterly gross margin stood at 47.6% compared with 48.3% in the prior-year quarter. Meanwhile, operating income in the reported quarter came in at $4 million against $10.6 million in the last-year quarter. Quarterly operating margin was 2.8% against 6.7% in the prior-year quarter. Notably, the company’s board of directors declared a cash dividend of 9 cents per share for the quarter. The dividend will be paid on Feb 19 to shareholders of record as of Feb 5.

The company posted improved year-over-year numbers backed by strong contributions from all segments. The results were also well supported by an improved spending atmosphere, strong geographic presence, and launch of new products.

During fiscal 2014, ADTRAN generated $55.8 million of cash from operations compared with $59.8 million in fiscal 2013. Free cash flow, in the fiscal, was $44.5 million compared with $51.6 million in prior fiscal. At the end of fiscal 2014, cash and marketable securities were $120.3 million compared with $164.1 million at the end of fiscal 2013.

Stocks to Consider

ADTRAN currently has a Zacks Rank #3 (Hold). Other better-ranked stocks in the sector include Arris Enterprises Inc. (ARRS), Zayo Group Holdings, Inc. (ZAYO) and Aruba Networks, Inc. (ARUN). All three have a Zacks Rank #2 (Buy).