North America

Earnings Preview: Juniper Networks Q2 2017 (JNPR)

By: Craig Bowles

Overview

Juniper Networks, Inc. (JNPR) is slated to report 2Q 2017 earnings after the bell on Tuesday, July 25th. The earnings release is expected at approximately 4:15 p.m. ET followed by a 5:00 p.m. conference call available at Juniper Investor Relations. The company designs, develops, and sells products and services for high-performance networks worldwide.

Outliers & Strategy

Key measures:

  • Non-GAAP Earnings Per Share (EPS): Company guidance is $0.51 to $0.57. The Street estimate is $0.54 (range $0.52 to $0.56). (source: Yahoo!.com) Consensus was $0.53 three months ago.
  • Revenues: Company guidance is $1.25 bln to $1.31 bln. Analysts expect an increase of 5.4% y/y to $1.29 bln. Consensus was $1.28 bln three months ago.
  • Adjusted Earnings Per Share (EPS) Guidance for 3Q2017: The current Street estimate is $0.58 (range $0.54 to $0.62).
  • Revenue Guidance for 3Q2017: The current Street estimate is up 3.2% y/y to $1.33 bln (range $1.28 bln to $1.38 bln).
  • Juniper’s Price/Book of 2.2 compares to a 5-year average of 1.7, Price/Sales of 2.2 compares to a 5yr average 2.3, and Price/Cash Flow of 7.7 compares to a 5-year average of 12.8.
  • Analysts see Juniper with 10 Buy, 12 Hold, and 3 (2 last qtr) Sell ratings. (source: MarketBeat.com)
  • Insiders have sold 1,351,400 shares the last three months and 4,593,559 shares in the past year. (source: NASDAQ.com) Juniper’s stock buyback program from March 2014 of $2 billion reduced the float 16%. The company hasn’t announced another buyback.
  • Juniper Network’s results are compared to networking and communication companies, such as F5 Networks (FFIV), Riverbed Technology (RVBD), Ciena (CIEN), Palo Alto (PANW), Arista Networks (ANET), Aruba Networks (ARUN), Cisco (CSCO) and Alcatel-Lucent (ALU).
  • Juniper shares have a 1-day average price change on earnings of 6.78%. Options are pricing in an implied move of 5.11% off earnings.

Recent News

  • 07/10: BMO Capital upgraded Juniper to Outperform from Market Perform citing newer products in network switching are primed to take share in the data center market dominated by Arista and Cisco, according to a post by Barron’s.com.
  • 07/05: Pacific Crest initiated coverage on Juniper Networks with a Sector Weight rating citing valuation but likes the company’s positioning when it comes to cloud capex growth over the coming 2-3 year period citing QFX switching platform, according to a post by StreetInsider.com.
  • 04/26: Juniper Networks Inc.’s strategy to diversify its customer base beyond its core group of telecommunications customers to cloud computing customers and corporate data centers is leading to new revenue growth, but the embrace of the cloud also comes at a cost, according to a post by MarketWatch.com.

Technical Review

Juniper has been somewhat trendless the last decade but has shown some life every 4 years, so 2015 kept the cycle going but the November 4, 2015 high of $32.39 was somewhat disappointing. 2007 tested over $36 and 2011 reached $44. (Chart courtesy of StockCharts.com)

Summary

Juniper has undergone some restructuring of their operations and faces intense competition in the cloud segment and security areas as the routing business has stagnated. Insider selling has steadily picked up since last summer. The company had beaten analyst earnings consensus by an average of 4c the past four quarters. Estimize consensus for a Non-GAAP EPS $0.56 on revenue of $1.289 bln compares to analyst consensus for a Non-GAAP EPS $0.54 on revenue of $1.29 bln. Next quarter’s guidance is of interest, as well.

 

 

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