CPWR Earnings Beat by a Penny - Analyst Blog
25 Luglio 2013 - 4:04PM
Zacks
Compuware Corp (CPWR) reported
first quarter 2014 earnings of 7 cents per share, which beat the
Zacks Consensus Estimate by a penny.
Earnings (including stock based compensation and related tax
effect) jumped 16.7% from the year-ago quarter and 75.0% from the
previous quarter. The strong earnings growth was primarily driven
by lower cost and improving margins.
Quarter Details
Revenues inched up a modest 0.6% from the year-ago quarter but
declined 5.2% from the previous quarter to $227.5 million. Revenues
were slightly ahead of the Zacks Consensus Estimate of $225.0
million.
The modest year-over-year growth was primarily driven by strong
performance from Changepoint (up 17.2%), Covisint (up 17.1%),
professional services (up 5.5%) and APM (up 3.2%), which offset
weak growth in Mainframe (down 8.3%) and Uniface (down 6.2%).
The sequential decline was primarily attributed to weak results
from APM (down 4.9%), Mainframe (down 10.1%), Uniface (down 22.4%)
and Covisint (down 6.3%), which were partially offset by strong
performance in changepoint (up 5.1%) and professional services (up
12.8%).
Operating expenses (excluding restructuring expenses) as a
percentage of revenues declined 10 basis points (bps) from the
year-ago and 20 bps from the previous quarter. This was primarily
attributed to lower sales & marketing expense, which as a
percentage of revenues contracted 140 bps from the year-ago quarter
and 200 bps from the previous quarter.
Operating margin (excluding restructuring expenses) improved 10 bps
from the year-ago quarter and 20 bps from the previous quarter due
to lower-than-expected rise in expenses. Net income as percentage
of revenues increased 150 bps from the year-ago quarter but
declined 200 bps sequentially.
At the end of the first quarter of 2014, cash and cash equivalents
amounted to $81.3 million, down from $89.8 million in the previous
quarter. Long-term debt stood at $15.0 million as compared to $18.0
million in the previous quarter.
Compuware declared and paid its first quarterly dividend of $0.125
per share during the quarter. The company bought back 300K shares
for approximately $3.5 million.
Outlook
Compuware reiterated its fiscal 2014 outlook. Management continues
to expect revenues in the range of $1.004 to $1.012 billion (up 7%
year over year) while non-GAAP earnings are expected to be in the
range of 47 cents - 49 cents per share. The company expects to save
$45 million in costs in fiscal 2014. Management expects to save
$80.0 to $100.0 million in costs by fiscal 2016.
Compuware expects both the APM and Changepoint segment to grow 15%
from the year-ago period. Management expects revenues from Uniface
to grow 2%, while professional services are expected to increase
6.0% from 2013. However, revenues from Mainframe are expected to
decline 5% in fiscal 2014.
Recommendation
We believe that Compuware’s innovative product pipeline,
initiatives to reduce costs and gain new programs will boost
profitability going forward.
However, Compuware operates in an intensely competitive landscape
and competes with the likes of BMC Software Inc.
(BMC), CA Technologies
(CA) and International Business
Machines Corp (IBM) with respect to one
or more offerings.
Moreover, execution challenges (related to acquisition, geography
and people) are the major headwinds going forward.
Currently, Compuware has a Zacks Rank #4 (Sell).
BMC SOFTWARE (BMC): Free Stock Analysis Report
CA INC (CA): Free Stock Analysis Report
COMPUWARE CORP (CPWR): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
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