Why CalAmp Corp. Stock Fell 13.7% in April

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What happened

Shares of CalAmp Corp. (NASDAQ:CAMP) declined 13.7% in April, according to data from S&P Global Market Intelligence, after the machine-to-machine communications company delivered a solid fiscal fourth-quarter 2018 report, but followed with light forward guidance.

More specifically, CalAmp’s revenue last quarter climbed 9.6% year over year to $94.4 million, and translated to 11.1% growth in adjusted net income to $10.9 million. Adjusted net income per share also rose 7.1% to $0.30. By comparison, CalAmp’s own financial guidance — provided with its previous quarter’s report in December — called for roughly the same revenue of $91 million to $96 million and adjusted earnings per share of $0.27 to $0.33. 

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So what

CalAmp’s top line was driven by a 10.4% increase in telematics systems segment revenue to $78.3 million, and 5.9% growth in software and subscription services revenue to $16.1 million. Within the latter, CalAmp’s LoJack Italia subsidiary saw sales jump 31% to $4.2 million.

CalAmp also enjoyed solid momentum with several large customers during the quarter. Revenue from Caterpillar — its single biggest client — totaled $11.6 million, and CalAmp successfully ramped shipments to a second unnamed heavy equipment OEM for sales of $3.4 million. In addition, CalAmp announced a new partnership with TransUnion to monetize its installed base of dormant LoJack devices, which will enable stolen vehicle recovery for insurance companies and their customers going forward.

Now what

For the first quarter of CalAmp’s new fiscal year, however, management told investors to expect revenue of $91 million to $95 million, with adjusted earnings per share of $0.26 to $0.32. Most analysts were anticipating revenue and earnings near the high ends of those ranges.

To be fair, CalAmp CEO Michael Burdiek also noted that later this year, the company’s telematics device business is expected to benefit from “technology transition tailwinds,” while the software and subscription side should deliver “solid growth” with the impending deployment of new large program wins.

Unfortunately, near-term oriented investors hate being told to hurry up and wait. So while CalAmp’s long-term story remains intact, it was no surprise to see the stock pull back given its underwhelming current-quarter last month.

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

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