Why NetApp Stock Gained 31% in August

By MarketsFool.com

Image source: NetApp.

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What happened

Shares of enterprise storage and data management solutions provider NetApp (NASDAQ: NTAP) soared 31.3% in August, according to data provided byS&P Global Market Intelligence. The jump was driven by a strong fiscal first-quarter report, with the company beating analyst estimates across the board.

So what

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NetApp reported first-quarter revenue of $1.29 billion, down 3% year over year but $30 million higher than the average analyst estimate. Product and software maintenance revenue declined slightly year over year, while hardware maintenance and other services revenue dropped by 7%. Despite the revenue decline, deferred revenue and financed unearned services revenue rose 8% year over year.

Non-GAAP EPS came in at $0.46, up from $0.29 during the prior-year period and $0.10 better than analysts were expecting. On a GAAP basis, NetApp reported EPS of $0.23, up from a loss of $0.10 during the same period last year. The main driver of the earnings growth was a steep drop in operating expenses. GAAP sales and marketing expense was reduced by 12.8% year over year, while research and development expense declined by 15.2%.

NetApp CEO George Kurian summed up the quarter:

Now what

NetApp expects another revenue decline during the second quarter, calling for revenue $1.265 billion to $1.415 billion. That compares to revenue of $1.45 billion during the second quarter of last year. Non-GAAP EPS is expected to be $0.51 to $0.56, down from $0.61.

While NetApp reported another revenue decline during the first quarter, better-than-expected earnings were enough to send the stock much higher in August.

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Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.