Analytical Report: Mellanox Technologies, Ltd. (NASDAQ:MLNX)

Mellanox Technologies, Ltd. (NASDAQ:MLNX) reported earnings for the three months ended Mar2016 on April 20, 2016. The company earned $0.81 per share on revenue of $196.81M. Analysts had been modeling earning per share of $0.76 with $191.65M in revenue.

Mellanox Technologies, Ltd. (NASDAQ:MLNX) announced financial results for its first quarter ended March 31, 2016.

First Quarter 2016 -Highlights

• Revenues of $196.8 million increased 11.2 percent, compared to $176.9 million in the fourth quarter of 2015.


• GAAP gross margins of 64.2 percent in the first quarter compared to 70.7 percent in the fourth quarter of 2015.


• Non-GAAP gross margins of 71.4 percent in the first quarter compared to 72.2 percent in the fourth quarter of 2015.


• GAAP operating loss was $3.9 million, compared to operating income of $19.9 million in the fourth quarter of 2015.


• Non-GAAP operating income was $41.3 million, or 21.0 percent of revenue, compared to $36.6 million, or 20.7 percent of revenue in the fourth quarter of 2015.


• GAAP net loss was $7.2 million, compared to net income of $43.2 million in the fourth quarter of 2015.


• Non-GAAP net income was $39.3 million, compared to $37.5 million in the fourth quarter of 2015.


• GAAP net loss per diluted share was $0.15 in the first quarter compared to net income per diluted share of $0.90 in the fourth quarter of 2015.


• Non-GAAP net income per diluted share was $0.81 in the first quarter compared to $0.77 in the fourth quarter of 2015.


• $48.6 million in cash was provided by operating activities, compared to $34.7 million in the fourth quarter of 2015.


• Cash and investments totaled $261.8 million at March 31, 2016, compared to $510.5 million at December 31, 2015.

Second Quarter 2016 Guidance

We currently project:

• Quarterly revenues of $210 million to $215 million


• Non-GAAP gross margins of 71 percent to 72 percent


• An increase in non-GAAP operating expenses of 8 percent to 10 percent


• Share-based compensation expense of $13.4 million to $13.9 million


• Non-GAAP diluted share count of 48.8 million to 49.3 million shares

Mellanox Technologies, Ltd. earnings per share showed an increasing trend of 463.1% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 420%.Analysts project EPS growth over the next 5 years at 17.5%. It has EPS annual growth over the past 5 fiscal years of 38.5% when sales grew 33.6. It reported 34.2% sales growth, and -167.8% EPS decline in the last quarter.

The stock is trading at $47.4, up 47.02% from 52-week low of $32.24. The stock trades down -15.05% from its peak of $55.8 and 32.43% above the consensus price target of $62.77. Its volume clocked up at 0.51 million shares which is lower than the average volume of 0.68 million shares. Its market capitalization currently stands at $2.23B.