Itron (ITRI) Posts Mixed Results, Strong Guidance

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08:28:11 pm on July 27, 2011

If you look at the mainstream financial headlines of the Itron (ITRI) earnings report tonight you’ll be led to believe that the company beat both on the top and bottom line by a wide margin.   Unfortunately, most mainstream news outlets don’t use the non GAAP number and back out one time gains and losses.  So, yes headlines can be misleading in this industry.  Let’s set the record straight.  Itron (ITRI) posted a solid quarter no question, but when you remove the one time tax benefit, the company missed analyst estimates for $1.05, reporting $1.01.  The company beat on the revenue side posting $612 million vs the analyst estimate for $573 million.  If in fact the company did achieve a clean beat in the quarter, you’d likely see the stock up significantly after house considering how beaten down it’s been.  The stock is trading down a bit after hours.

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CEO Malcolm Unsworth commented on the quarter: “I am very pleased with the performance of Itron International. We had record gas and water revenue in the quarter further demonstrating the strength of our global footprint and balanced portfolio.  Our smart metering projects in North America are continuing to drive revenue, but one of the keys to our future growth is to continue to introduce innovative technologies in other parts of the world and to streamline our operations to improve profitability and our time to market."

Looking ahead to the full year, the company is providing the following guidance:

— Revenue between $2.3 billion and $2.4 billion (analysts predict $2.31B).  That’s up from the previous guidance of $2.15 – $2.3B.

— Non-GAAP diluted EPS between $4.20 and $4.60 (analysts predict $4.23B).  That’s up from the previous guidance $3.95 – $4.40.

Technically, shares of ITRI remain in a steady downtrend and I’m not yet seeing signs that the downtrend is nearing completion.  I like this company very much and believe at some point it will offer an outstanding long term entry point.  It’s too soon yet though.  In my last report on ITRI back in April I said I thought the $50 level was looking like a bottom, but the big buy volume never developed around that level and it didn’t take long for the $50 level to be breached and act as resistance.  The $45 area is a new possible level of support, but there just aren’t definitive signs yet that level will hold either.

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