Stock Story -
Advanced materials manufacturer Rogers (NYSE:ROG) fell short of analysts' expectations in Q2 CY2024, with revenue down 7.2% year on year to $214.2 million. Next quarter's revenue guidance of $220 million also underwhelmed, coming in 2.9% below analysts' estimates. It made a GAAP profit of $0.44 per share, down from its profit of $0.96 per share in the same quarter last year.
Is now the time to buy Rogers? Find out by reading the original article on StockStory, it's free.
Rogers (ROG) Q2 CY2024 Highlights:
- Revenue: $214.2 million vs analyst estimates of $216.2 million (small miss)
- EPS: $0.44 vs analyst expectations of $0.50 (12% miss)
- Revenue Guidance for Q3 CY2024 is $220 million at the midpoint, below analyst estimates of $226.7 million
- EPS (non-GAAP) Guidance for Q3 CY2024 is $0.85 at the midpoint, below analyst estimates of $0.95
- Gross Margin (GAAP): 34.1%, down from 34.5% in the same quarter last year
- Market Capitalization: $2.35 billion
Electronic ComponentsLike many equipment and component manufacturers, electronic components companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include data centers and telecommunications, which can benefit companies whose optical and transceiver offerings fit those markets. But like the broader industrials sector, these companies are also at the whim of economic cycles. Consumer spending, for example, can greatly impact these companies’ volumes.
Sales GrowthA company's long-term performance is an indicator of its overall business quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for multiple years. Rogers's demand was weak over the last five years as its sales fell by 2.4% annually, a rough starting point for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Rogers's recent history shows its demand has stayed suppressed as its revenue has declined by 5.7% annually over the last two years.
This quarter, Rogers missed Wall Street's estimates and reported a rather uninspiring 7.2% year-on-year revenue decline, generating $214.2 million of revenue. The company is guiding for a 4% year-on-year revenue decline next quarter to $220 million, an improvement from the 7.3% year-on-year decrease it recorded in the same quarter last year. Looking ahead, Wall Street expects sales to grow 6.1% over the next 12 months, an acceleration from this quarter.
Operating Margin
Rogers has done a decent job managing its expenses over the last five years. The company has produced an average operating margin of 9.5%, higher than the broader industrials sector.
Looking at the trend in its profitability, Rogers's annual operating margin decreased by 6.2 percentage points over the last five years. Even though its margin is still high, shareholders will want to see Rogers become more profitable in the future.
In Q2, Rogers generated an operating profit margin of 5.3%, down 5.7 percentage points year on year. Since Rogers's operating margin decreased more than its gross margin, we can assume the company was recently less efficient because expenses such as sales, marketing, R&D, and administrative overhead increased.
EPSAnalyzing long-term revenue trends tells us about a company's historical growth, but the long-term change in its earnings per share (EPS) points to the profitability of that growth–for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for Rogers, its EPS declined more than its revenue over the last five years, dropping by 21.2% annually. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
We can take a deeper look into Rogers's earnings to better understand the drivers of its performance. As we mentioned earlier, Rogers's operating margin declined by 6.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals.
Like with revenue, we also analyze EPS over a shorter period to see if we are missing a change in the business. For Rogers, its two-year annual EPS declines of 15.4% show it's still underperforming. These results were bad no matter how you slice the data.
In Q2, Rogers reported EPS at $0.44, down from $0.96 in the same quarter last year. This print missed analysts' estimates. Over the next 12 months, Wall Street expects Rogers to grow its earnings. Analysts are projecting its EPS of $3.12 in the last year to climb by 20.3% to $3.76.
Key Takeaways from Rogers's Q2 Results We struggled to find many strong positives in these results. Its EPS missed and its revenue guidance for next quarter fell short of Wall Street's estimates. Overall, this was a bad quarter for Rogers. The stock remained flat at $122.68 immediately after reporting.
