Kornit Digital (KRNT) Announces Second Quarter Loss, Exceeds Revenue Estimates

Kornit Digital (KRNT) came out with a quarterly loss of $0.31 per share against Zacks’ consensus estimate of a loss of $0.28. That compares to earnings of $0.22 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a profit surprise of -10.71%. A quarter ago, this digital textile printer was expected to post earnings of $0.15 per share when it was actually producing breakeven earnings, delivering a -100% surprise.

Over the past four quarters, the company has been unable to exceed consensus EPS estimates.

Digital Kornit, which is owned by Zacks Commercial Printing Industry, posted revenue of $58.14 million for the quarter ended June 2022, beating Zacks’ consensus estimate by 2.53%. That compares to revenues of $81.67 million a year ago. The company has exceeded consensus revenue estimates only once in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Shares of Kornit Digital have lost about 80.5% year-to-date against a -13.5% decline for the S&P 500.

What’s next for Kornit Digital?

While Kornit Digital has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this publication of results, the trend of revisions of estimates for Kornit Digital: unfavourable. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a Zacks No. 5 ranking (strong sell) for the stock. Thus, stocks are expected to underperform the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.19 on $58.4 million in revenue for the upcoming quarter and -$0.92 on $260 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, commercial printing is currently in the bottom 7% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Ituran (ITRN), another stock in the broader Zacks Industrials sector, has yet to report results for the quarter ending June 2022. Results are expected to be released on August 29.

This maker of vehicle tracking and communication technologies is expected to post quarterly earnings of $0.46 per share in its next report, representing a year-over-year change of +4.6%. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.

Ituran’s revenue is expected to be $71.94 million, up 6.7% from the year-ago quarter.

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