Can SanDisk Balance Weak Earnings With Its Current Outlook?
SanDisk reported better than expected fourth-quarter results Wednesday after the markets closed.
SanDisk Corp. (NASDAQ: SNDK) reported its fourth-quarter results Wednesday after the market closed as $1.30 in earnings per share and $1.74 billion in revenue. That compared to Thomson Reuters consensus estimates of $1.27 in earnings per share and $1.73 billion in revenue. Last year’s fourth quarter had $1.71 in earnings per share and $1.73 billion in revenue.
Earlier in the month, SanDisk released a warning for these earnings that had a severe impact on its stock. The company lowered its fourth-quarter revenue guidance as well as gross margin. Weaker-than-expected retail sales and iNAND sales were the primary drivers for the lowered revenue guidance
SanDisk announced that its board of directors authorized a $2.5 billion increase in the company’s existing share repurchase program. With the additional authorization, the company has approximately $3.0 billion remaining available for stock repurchases under the program.
The company also announced that there will also be a first quarter 2015 dividend of $0.30 per share of common stock, payable on March 23, to shareholders as of the close of March 2.
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Sanjay Mehrotra, president and CEO of SanDisk, said:
We delivered record revenue in 2014 with continued progress in shifting our portfolio towards high value solutions. Our SSD solutions reached 29 percent of revenue in 2014, with strong growth from both client and enterprise SSDs. We are disappointed with our fourth quarter results, which were impacted primarily by supply constraints. We believe that NAND flash industry fundamentals are healthy, and we expect our financial results to improve as we move through 2015.
The brokerage firm, Nomura, appears to have taken the warnings seriously and downgraded SanDisk to a Reduce rating from Neutral, as well as lowering its price target to $65 from $70. This call came just a day before earnings were to be reported, and it implies a downside of 17.5% from Tuesday’s close.
Shares of SanDisk closed Wednesday up 2% at $80.44. After the release of the earnings report, shares were up 1% at $81.20 in post-market trading. The stock has a consensus analyst price target of $103.71 and a 52-week trading range of $66.80 to $108.77. The market cap is now about $17 billion.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
