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MicroStrategy, Inc.

by Michael Vodicka

March 17, 2011 | Comments : 0 Recommended this article: (0)

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MicroStrategy, Inc. ( MSTR - Snapshot Report ) recently spiked to a new multi-year high after reporting an awesome 72% Q4 earnings surprise in late January. Estimates have since jumped higher, providing more support and momentum for this Zacks #1 rank stock.

Company Description

MicroStrategy operates as a business intelligence software maker that helps companies collect and analyze data. The company was founded in 1989 and has a market cap of $1.2 billion.

Although the general trend for MSTR has been higher for the last few years, shares took a cosmic jump in late January after the company reported strong fourth-quarter results that handily beat expectations.

Fourth-Quarter Results

Revenue for the period was up 31% from last year to a record $139 million. Earnings also looked great, coming in at $1.60, 72% ahead of the Zacks Consensus Estimate.

The gains were driven by licensing revenue, which increased 59% to $48 million. Its largest segment, support and service for its business intelligence suite, saw sales increase 20% from last year to $86 million.

Financial Profile

Moving forward. MicroStrategy will continue to benefit from its strong financial profile, with cash and equivalents of $174 million and no long-term debt.

Estimates

We saw some pretty solid movement in estimates off the good quarter, with the current year adding 33 cents to $3.79 and the next-year estimate gaining 99 cents to $4.74, a bullish 25% growth projection.

Valuation

In light of the recent gains, MSTR trades at a premium to its peers with a forward P/E of 30X compared to 23X.

12-Month Chart

On the chart, MSTR has been trending higher for most of the last two years before jumping higher to a new high on the good earnings surprise. Look for support from the long-term trend on any weakness. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.

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