Video game headset and accessories maker Turtle Beach (HEAR) on Wednesday announced preliminary fourth-quarter results that far exceeded Wall Street’s estimates. The news sent HEAR stock on a wild ride.
The company said it expects adjusted earnings per share of 73 cents to 82 cents for the December quarter. Analysts had estimated earnings of 47 cents a share. San Diego-based Turtle Beach also forecast fourth-quarter sales of $130 million to $132 million, vs. views for $104.9 million. In the year-earlier period, Turtle Beach earned an adjusted 83 cents a share on sales of $101.8 million.
In morning trades on the stock market today, HEAR stock jumped 13.5% to a seven-year high of 35.74. But soon HEAR stock turned south. At one point Wednesday, HEAR stock was down 1.5% to 31. In afternoon trades, HEAR stock was up 1.5%, near 31.95.
Turtle Beach Chief Executive Juergen Stark said he expects sales growth in 2021. Wall Street had predicted sales would decline 3% this year.
“Even with record 2020 sales that reflected more than 50% growth over 2019, we expect to guide to sales growth in 2021 when we discuss our outlook on our earnings call in March,” Stark said in a news release. “We plan to continue making investments to drive long-term growth, including offering new gaming hardware categories and accelerated expansion into select geographic regions.”
HEAR Stock: Strong Demand During Holidays
Turtle Beach noted strong demand for console gaming headsets and PC gaming accessories in the holiday quarter.
“We ended the year with $46 million in cash, no debt and a strong platform for expanding into new product categories and continuing to grow the business,” Stark said.
He added, “Over the past five years, we have delivered a CAGR (compound annual growth rate) of over 17% for sales and over 30% for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). The strong levels of sales, profit and cash flow we have achieved in recent years have given us ample resources to pursue new avenues of growth, and we intend to maintain the momentum.”
HEAR Stock Has Perfect IBD Composite Rating
HEAR stock ranks first out of 13 stocks in IBD’s Consumer Products-Electronics industry group, according to the IBD Stock Checkup tool. It has a best-possible IBD Composite Rating of 99. IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
The consumer electronics industry group ranks No. 16 out of 197 industry groups that IBD tracks. Choosing highly rated stocks from leading industry groups in a confirmed uptrend generally increases your chances of making profits in growth stocks.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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