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Aggressive Growth

Manhattan Associates (MANH - Snapshot Report) is a Zacks #1 Rank (Strong Buy) after posting three solid earnings surprises and gets higher estimates for 2012.

Company Description

Manhattan Associates develops and provides supply chain software solutions for the planning and execution of supply chain activities. The company offers two platform based software solutions. Manhattan SCOPE focuses on planning and forecasting, inventory optimization, order lifecycle management, transportation lifecycle management, and distribution management. Manhattan SCALE is a portfolio of logistics execution solutions.

Three Straight Beats Lead to Stock Appreciation

MANH has topped the Zacks Consensus Estimate in each of the last three quarters with the average surprise coming in on average 36% ahead of expectations. These beats have slowed in absolute and percentage terms, but still have produced some solid gains in the share price as a result.

Moves of 12%, 11% and 7% respectively accompanied each of the last three beats. The previous four reports did include a lone earnings miss but saw shares sink following earnings reports, but not by much. Shares fell 1.6% or less in the three of those four quarters.

MANH Recently Reported Earnings

On January 31, 2012 the company reported revenue of $84 million up from $72 million in the year ago period. In addition, earnings per share came in at $0.50 up from $0.29 posted a year ago and $0.09 ahead of the Zacks Consensus Estimate.

Earnings Estimates Bumped Up

Following the most recent earnings report, analysts bumped up their earnings estimates for 2012. The Zacks Consensus Estimate for 2012 EPS moved from $2.11 in mid-January 2012 to the current level of $2.24.

Valuations

MANH has a pretty high valuation any way you look at it. The company trades at 20x forward earnings, a premium to the industry average of 14.6x and 23x trailing earnings compared to a 20x multiple for the industry average. Price to book of 5.8x is also a premium to the 4x industry average. Price to sales shows MANH trading at a discount to the industry average, but still holds a high 2.9x multiple which is less than the 3.5x industry average.

The Chart

A quick look at the price and consensus chart shows that MANH has seen more confidence from analysts. As earnings estimates increase, we see the stock follow the lead, and the gap between the estimates and price indicate that the stock may be undervalued. MANH is a Zacks #1 Rank (Strong Buy).

Manhattan Associates - ticker MANH>
 
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Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

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