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Aggressive Growth

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CommVault Systems Inc. (CVLT - Snapshot Report), an Enterprise Backup/Recovery software provider, delivered a 40% positive surprise in the recently concluded first quarter of 2013. This Zacks #1 Rank (Strong Buy) has posted an average earnings surprise of 17% over the trailing four quarters, and its long-term projected growth rate of 22% makes it a solid pick for growth.

Strong First Quarter

On July 31, CommVault reported that first quarter earnings surged 40% year over year to 21 cents per share, which exceeded the Zacks Consensus Estimate by 6 cents (40%). The strong growth was primarily driven by improved operating margin in the quarter.

Revenue jumped 21.6% from the prior-year quarter to $111.3 million, slightly above the Zacks Consensus Estimate of $109.0 million. The better-than-expected growth was driven by solid performances from software (up 23.8%) and services (up 19.5%).

Higher revenues and stringent cost control helped operating margin expansion of 390 basis points to 14.8%.

CommVault reiterated its fiscal 2013 outlook and continues to expect double-digit revenue and operating income growth for fiscal 2013, on the back of strong enterprise demand. ComVault expects the operating margin to expand 100 basis points in fiscal 2013.

Earnings Estimates Move Higher

Most analysts raised their forward estimates for both 2013 and 2014 over the last 30 days. For 2013, the Zacks Consensus Estimate jumped 6% to 90 cents as six of seven estimates were revised upward. For 2014, the Zacks Consensus Estimate of $1.06 improved 3.0% as five estimates out of seven moved upward.

Reasonable Valuation

Currently, CommVault is trading at a premium to most of its peers based on P/E, P/S and P/B. Its strong earnings growth expectation of 22.0% over the next five years compares favorably with the industry average of 15%, indicating room for further significant expansion. Moreover, its PEG ratio of 2.6 is lower than the industry average of 4.6x.

Incorporated in 1996, CommVault develops software that primarily helps enterprises to manage data and information. Through its flagship Simpana brand, the company delivers different data management activities including backup and recovery capabilities for both onsite and cloud environments.

Oceanport, New Jersey based CommVault has a market capital of $2.35 billion and competes with EMC Corp. (EMC), Hewlett-Packard (HPQ), IBM (IBM) and Symantec Corp. (SYMC).

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