Ambarella Q3 Earnings: Solid Execution

Small cap high-definition video solutions stockAmbarella Inc (NASDAQ: AMBA) reported fiscal Q3 2018 earnings after the Thursday close with revenues basicallyin line withWall Streetexpectations while the bottom line beat expectations and this quarters forecast is in line withanalyst expectations. Revenue fell 11.4% to$89.1 million and GAAP net income was $11.7 million versusGAAP net income of $29.0 million. For the current quarter ending in January, Ambarella said it expects revenue in the range of $68 million to $72 million. The CEO commented:

“During the quarter, we continued our solid execution in support of the development and delivery of our next generation of computer vision solutions. We met our aggressive goal of demonstrating our CV1 performance to customers and commenced sampling in the security and automotive markets. We continue to invest in leading edge technology to expand our market opportunities, both in current markets, and in a broad range of new automotive applications.

Ambarella Inc wasa Elite Opportunity Pro (EOP) newsletter portfolio pick both when thestock was offering attractive valuation metrics with good forward growth potential. Later on, we pointed out whenthe stockbecame an attractive short trade with our newsletter having this to say:

Ambarella, Inc. (AMBA) has been all over the map over the last few years. It has defied gravity both to the up and to the downside, and although today’s suggested short of the stock is strictly technical, we do believe its current share price has once again gotten a little out of line when you compare it to the rest of the markets’ valuation metrics right now.

Rather than get into the lofty valuation metrics though, we’re simply going to show you what we’re seeing from a technical perspective and let you decide what to do with the idea from there.

A technical chart for Ambarella Inc shows conflicting trend lines with shares off a September dip:

A long term performance chart shows shares of AmbarellaInc peaking in mid 2015before falling offto move within a range for the past two years while the performance oflarge capNVIDIA Corporation (NASDAQ: NVDA) has surged and small cap end customerGoPro Inc is still underperforming:

Finally, here is a quick recap of small cap Ambarellas recent earnings history along with EPS estimate trends from the Yahoo! Finance analyst estimates page going into the current earnings report:

Earnings History1/30/20174/29/20177/30/201710/30/2017
EPS Est. 0.74 0.36 0.44 0.67
EPS Actual 0.92 0.39 0.48 0.75
Difference 0.18 0.03 0.04 0.08
Surprise % 24.30% 8.30% 9.10% 11.90%
EPS TrendCurrent Qtr. (Jan 2018)Next Qtr. (Apr 2018)Current Year (2018)Next Year (2019)
Current Estimate 0.36 0.29 1.89 1.75
7 Days Ago 0.36 0.28 1.89 1.72
30 Days Ago 0.36 0.28 1.89 1.68
60 Days Ago 0.36 0.28 1.89 1.67
90 Days Ago 0.58 0.46 2.07 2.37

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