NetApp, Inc. (NTAP: 39.83 -1.58 -3.82%) has barely batted an eye at the weak market of the last few months, recently hitting a new all-time high at $40.64 after reporting a solid 18% earnings surprise in late May. With the next-year estimate projecting 11% growth, the longer term picture looks good too.Company Description
NetApp, Inc. is a provider of enterprise storage and data management software and hardware products and services. The company was founded in 1992 and has a market cap of $14.24 billion.
Although a bout of weakness has swung through the market over the last few months, NTAP has totally bucked the trend, helped by strong fourth-quarter results from May 26 that lifted shares to a new multi-year high.
Fourth-Quarter Results
Revenue for the period was up 27% from last year to $1.17 billion. Earnings also came in strong at 40 cents, 18% ahead of the Zacks Consensus Estimate. The company now has an average earnings surprise of 23%.
For the year, NetAp posted a 15% gain in revenue from last year to $3.93 billion, with income up to $1.13 from 19 cents in 2009.
Clearly, the company has emerged form the recession with force, with CEO Tom Georgens saying, “With accelerating revenue growth every quarter, we culminated our fiscal year with record levels of revenue, earnings per share, and free cash flow. The server vitalization and cloud computing trends are driving significant business for us.”
Balance Sheet
NetAp also saw its balance sheet perk up from last year, with cash and equivalents up $211 million to $1.71 billion and its short-term investments almost doubling to $2 billion against total debt of $1.27 billion.
A Look Forward-Guidance and Estimates
Although the company does expect to see a slight revenue decline of 3% to 6% from Q4 to Q1, that would still represent 34% growth from last year.
The analyst were encouraged by the results and the company’s revenue guidance, with the current-year estimate up 21 cents on the quarter to $1.53 and the next-year estimate up 20 cents to $1.71, an 11% growth projection.
Valuation
With NetAp showing some encouraging signs of growth, the valuation picture has gotten a bit rich, with a forward P/E of 27X against the industry average of 14X.
2-Year Chart
NTAP recently surged higher after a small dip in early July to move within striking distance of the multi-year high at $41.87. Look for support from the trend line and short-term low on any weakness, take a look below.
| Analysts' Targets | |
| Collins Stewart LLC | $50 |
| Sell | |
| Thursday, June 03, 2010 | |
| MKM Partners LLC | $50 |
| Neutral | |
| Thursday, May 27, 2010 | |
| UBS Securities | $42 |
| Add | |
| Thursday, May 27, 2010 | |
| Caris & Company | $40 |
| Average | |
| Thursday, May 27, 2010 | |
| RBC Capital Markets | $37 |
| Sector Perform | |
| Monday, April 12, 2010 | |
| J.P. Morgan Securities | $40 |
| Strong Buy | |
| Thursday, February 18, 2010 | |
| Barclays Capital | $36 |
| Equalweight | |
| Thursday, February 18, 2010 | |
| Canaccord Adams | $34 |
| Hold | |
| Thursday, February 18, 2010 | |
| SunTrust Robinson Humphrey | $35 |
| Market Perform | |
| Thursday, February 18, 2010 | |
| Wedbush Morgan Securities | $36 |
| Hold | |
| Thursday, February 18, 2010 | |
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