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Shares of ePlus Inc. gained significant momentum following its announcement of impressive first quarter 2013 results, which comfortably exceeded the Zacks Consensus Estimate. Moreover, ePlus authorized a 500K share repurchase that will be completed over the next 12 months. ePlus, which sells, finances and manages IT products and solutions, is a Zacks #1 Rank (Strong Buy) stock with shares that have jumped nearly 41% year to date.
ePlus reports impressive FQ1
On August 6, 2012 ePlus reported impressive fiscal first quarter results with net income of $8.1 million or $1.02 per share, compared with $3.7 million or 45 cents in the year-ago quarter., This result was primarily driven by exceptionally strong revenue growth.
Revenue jumped 36.8% year over year to $290.1 million, driven primarily by increasing customer demand for the companys technology solutions for the cloud, data center, collaboration, managed services and security segments.
Higher revenues drove a 10 basis point gross margin expansion in the reported quarter. Despite a 34.8% surge in operating expenses, earnings before income taxes soared 114.2% to $13.6 million in the quarter.
Earnings Momentum on the Rise
Currently, the Zacks Consensus Estimate for fiscal 2013 is $4.03, which is up 38% over the last 30 days. At the moment, there is only one analyst covering the company.
ePlus Remains Undervalued
Currently, ePlus is trading at a discount to its peers. It has a P/S of 0.31x, compared to the industry average of 4.04x. ePlus P/B of 1.36x also trails the 4.24x average for the industry. Most significantly, ePlus is trading at a forward P/E of 9.63x, compared with the industry average of 17.6x.
ePlus shares are currently above its 50 and 200 day moving averages of 35.13 and 32.54, respectively. Year to date, ePlus shares have also outperformed its peers, such as Primerica Inc. (PRI) and Cognizant Technology Solutions Corp. (CTSH). Trading volumes have increased considerably over the last 7 days (well above its three months average).
Historically, share prices have shown positive correlation to earnings growth. The uptrend in the 2012 earnings estimate should encourage investors as the stock is likely to follow the trend.
Herndon, Virginia based ePlus Inc. (formerly known as MLC Holdings) has been in the business of selling, financing and managing Information Technology (IT) products and solutions for more than 21 years. The company currently derives approximately 96.0% of revenues from its Technology Sales Business Segment, while the remaining comes from leasing and financing services. The company has more than 2,000 customers.
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