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Why CalAmp Stock Popped 13% Today

Rich Smith, The Motley Fool
Updated

What happened

CalAmp (NASDAQ: CAMP) stock leaped out of the gate Friday after the company announced estimate-beating earnings for its fiscal first quarter 2020. Shares of the subscription-based cloud platform provider were trading more tha 13% higher as of 11:20 a.m. EDT.

Analysts' consensus expectation was that the company would report $0.09 per share worth of pro forma profits for the quarter on sales of just over $87 million. Instead, CalAmp reported $0.12 per diluted share, which was on the high-end of its guidance range, on sales of $89.1 million.

Futuristic internet of things graphic with icons representing the cloud and AI and cybersecurity
Futuristic internet of things graphic with icons representing the cloud and AI and cybersecurity

Image source: Getty Images.

So what

CalAmp's revenues actually slid 6% year over year, however, "due to a decline in Telematics Systems product sales." Software and subscription service sales, on the other hand, climbed 38% year over year, which led to the higher per-share profits.

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That said, only CalAmp's pro forma profits are currently positive today. When calculated according to generally accepted accounting principles (GAAP), CalAmp actually lost $0.26 per diluted share, "reflecting non-recurring legal expenses and purchase accounting adjustments related to the recent acquisitions."

Now what

Heading into fiscal Q2 2020, CalAmp issued this new guidance:

Based on "revenue momentum across our SaaS businesses combined with an increase in MRM Telematics sales due to customer LTE transitions," management expects fiscal Q2 revenues to range from $89.5 million to $94.5 million, with pro forma profits between $0.08 and $0.14 per share. GAAP losses, however, will continue, at around $0.24 per share.

Taken at the midpoint, these numbers appear to be setting CalAmp up for a sales beat but an earnings miss in Q2. Wall Street is forecasting only $91.4 million in sales, but $0.15 per share in pro forma profit for the quarter.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends CalAmp. The Motley Fool has a disclosure policy.