NETGEAR (NTGR) Up 15.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for NETGEAR, Inc. (NTGR). Shares have added about 15.1% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is NETGEAR due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for NETGEAR, Inc. before we dive into how investors and analysts have reacted as of late.NETGEAR Q2 Earnings Top EstimatesNETGEAR reported second-quarter 2025 non-GAAP earnings per share of 6 cents, beating the Zacks Consensus Estimate of a loss of 16 cents. The company incurred a non-GAAP loss of 74 cents per share in the year-ago quarter. NETGEAR generated net revenues of $170.5 million, beating the consensus estimate by 5.3%. The figure also surpassed the company’s guidance of $155-$170 million. Revenues rose 18.5% on a year-over-year basis and 5.2% sequentially. The company revealed that the successful channel destocking plan in 2024 and operational discipline drove the results.It generated $9 million of recurring services revenues in the reported quarter. It now has 559,000 recurring subscribers. In the second quarter, NETGEAR acquired Exium to add security specifically designed for small and medium enterprises to its NFB portfolio. NETGEAR is now reporting revenues under three segments, NFB, Mobile and Home networking.The company noted that within the NFB segment, it continues to witness lengthy lead times for supply, though demand for its ProAV line of managed switches remains robust. This is likely to restrict the realization of the full revenue potential of this segment. The Home Networking segment will benefit from an expanded product portfolio. Mobile segment revenues are expected to be in line with the second quarter. Net revenues for the third quarter are predicted between $165 million and $180 million.Quarterly DetailsDriven by the ongoing momentum for ProAV managed switch products (up double-digit year over year across all geographic regions), revenues from the NFB segment jumped 38% to $82.6 million. NETGEAR continues to witness supply constraints around certain managed switch products, leading to constrained revenue expectations for the same in the second half.However, it is carrying a higher backlog for ProAV Managed Switch products despite the challenged supply, but anticipates gradual improvement through the first quarter of 2026.Due to weaker-than-expected service provider sales, the Mobile segment’s revenues of $20.4 million fell 16.1% year over year and 5% sequentially. The company remains focused on executing its ‘good-better-best' strategy with product launches scheduled for later in the year.Home Networking business revenues jumped 13.1% on a year-over-year basis and 10% sequentially to $67.5 million. A favorable product mix stemming from the expansion of the product portfolio, improved operational footprint and progress in selling old inventory acted as major catalysts.Our estimates for NFB, Mobile and Home Networking stood at $76.9 million, $63.6 million and $21.5 million, respectively. The gross margin performance gained from improved mix of the higher-margin NFB business, better sales returns and associated costs, and selling the older, higher cost inventory.The adjusted gross margin increased year over year to 37.8% from 22.4%.  NFB gross margin came in at 46.7% compared with 33.7% reported in the prior year quarter. The non-GAAP operating loss was $1.2 million against an operating income of $31.1 million in the year-ago quarter.Non-GAAP operating expenses were $65.7 million, up 3.7% year over year due to hiring plans. Region-wise, net revenues from the Americas were $116.3 million (68% of total revenues), up 21.8% year over year. Europe, the Middle East and Africa generated revenues (20%) were $34.4 million, up 25.7%. Revenues from the Asia Pacific region (12%) fell 5.5% year over year to $19.9 million.Cash Flow & LiquidityFor the quarter ended June 29, 2025, NETGEAR used $1.8 million in cash from operations.The company also had $364 million in cash and cash equivalents, and short-term investments, as well as $243.1 million of total current liabilities. It repurchased shares worth $7.5 million in the quarter under review. In 2024, NETGEAR bought back $33.6 million worth of shares. The company has 2.8 million shares left under its existing authorization.GuidanceThe GAAP operating margin is forecast between (11)% and (8)%. The non-GAAP operating margin is estimated to be (5.5)-(2.5)%.  GAAP tax expenses are anticipated between $0.8 million and $1.8 million, with non-GAAP tax expenses between $(0.5) million and $0.5 million for the third quarter of 2025.How Have Estimates Been Moving Since Then?Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.VGM ScoresAt this time, NETGEAR has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a score of C on the value side, putting it in the middle 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.Outlook NETGEAR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NETGEAR, Inc. (NTGR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks