The market's hate-hate relationship with Fitbit Inc. (FIT) continues.
Fitbit's better-than expected second-quarter results, which were announced Wednesday after the market closed, yielded an 8% butt-kicking on Thursday. That decline followed some decent gains in Wednesday's post-market trading. The sell-off pushed Fitbit back to early-June levels, prior to a solid run-up that saw shares hit the mid-$7 level.
The beleaguered wearables name beat consensus estimates on both the top and bottom lines. Revenue came in at $299.3 million, nearly $14 million above expectations, while the company's loss of 22 cents a share beat the consensus by two cents. Fitbit's new Versa smartwatch sold extremely well, almost selling out and outselling Samsung, Garmin Ltd. (GRMN) , and Fossil Group Inc. (FOSL) smartwatches combined in North America.
The balance sheet remains strong. Fitbit ended the quarter with $580 million, or about $2.40 per share, in cash and short-term investments and no debt. In early July, it also received a $72 million tax refund, which is not included in the aforementioned figures. Guidance for next quarter suggests revenue in the range of $370 million to $390 million, and the consensus earnings estimate is calling for a loss of two cents a share.
It could be that the market is holding out for profitability before it will reward Fitbit. In the meantime, with a rather tiny enterprise value of about $730 million (excluding the tax refund), I still maintain that FIT could make an interesting target for a bigger fish. It's an outside shot for sure, but with a solid brand name, boatloads of cash and no debt, it could be interesting to someone with deeper pockets looking to build out its brand portfolio. After yesterday's drubbing, my position stands just slightly underwater.
Elsewhere in deep value land, Kulicke & Soffa Industries Inc. (KLIC) had a good quarter, beating the third- quarter consensus earnings forecast of 61 cents a share by 28 cents and the revenue forecast of $261.7 million by $6.7 million. Presenting another solid balance sheet, Kulicke & Soffa ended the quarter with $620 million, or about $9 per share, in cash and short term investments and just $15 million in debt.
Kulicke & Soffa initiated a 12-cent quarterly dividend during the quarter and bought back 1.8 million shares during the quarter at an average price of $23.75, which is below yesterday's closing price of $26.83. I am a big fan of companies paying dividends, especially when they are increasing, and buying back shares; we'll see how this plays out for KLIC.
Finally, FreightCar America Inc. (RAIL) had a mixed quarter. Its loss of 19 cents a share beat the consensus estimate by 26 cents, but its revenue of $66.7 million was well-below the consensus of $77.3 million. FreightCar America is attempting to fight its way back to profitability and is expected to be marginally profitable next year.
RAIL ended the quarter with $81.5 million, or about $6.60 per share in cash and marketable securities, and no debt. The company spent a big chunk of cash -- $37.8 million -- during the quarter on an investment in railcars built for its JAIX leasing arm. RAIL trades just over 2x net current asset value.
