Mentor Graphics Beats on Both Top and Bottom Lines

Mentor Graphics (Nasdaq: MENT  ) reported earnings on Nov. 29. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Oct. 31 (Q3), Mentor Graphics beat slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew and GAAP earnings per share grew significantly.

Gross margins dropped, operating margins increased, net margins increased.

Revenue details
Mentor Graphics recorded revenue of $268.8 million. The seven analysts polled by S&P Capital IQ predicted revenue of $265.2 million on the same basis. GAAP reported sales were 7.3% higher than the prior-year quarter's $250.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.32. The six earnings estimates compiled by S&P Capital IQ predicted $0.28 per share. GAAP EPS of $0.27 for Q3 were 23% higher than the prior-year quarter's $0.22 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 82.0%, 260 basis points worse than the prior-year quarter. Operating margin was 14.4%, 370 basis points better than the prior-year quarter. Net margin was 11.4%, 180 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $346.7 million. On the bottom line, the average EPS estimate is $0.59.

Next year's average estimate for revenue is $1.10 billion. The average EPS estimate is $1.39.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 108 members out of 142 rating the stock outperform, and 34 members rating it underperform. Among 31 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 23 give Mentor Graphics a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Mentor Graphics is buy, with an average price target of $20.43.

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