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Why Is Amdocs (DOX) Up 6.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have added about 6.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amdocs due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Amdocs’ Q2 Earnings Miss Estimates
Amdocs reported second-quarter fiscal 2021 non-GAAP earnings of $1.13 per share. The reported figure missed the Zacks Consensus Estimate of $1.14. However, the figure increased 4.6% year over year.
Revenues of $1.05 billion marginally surpassed the consensus mark of $1.04 billion and remained flat year over year. The top line was negatively impacted by foreign currency headwinds of approximately $1 million.
However, growth of the customer base was a positive.
Amdocs also announced separately that it has acquired technology consultancy firm, Sourced Group, to strengthen its capabilities to aid the cloud transformation of service provider customers. Notably, Sourced Group specializes in large-scale cloud transformations for big players in industries, such as financial services, communications and others.
Quarterly Details
North America revenues (64.8% of total revenues) declined 1.8% year over year to $679.1 million in the reported quarter.
However, Europe revenues (14.2% of total revenues) of $148.8 million inched up 0.3% year over year. Moreover, Rest of the World revenues (21% of total revenues) grew 6% year over year to $220.8 million.
Managed services revenues climbed 5% year over year to $634.6 million.
The company ended the fiscal second quarter with a 12-month backlog of $3.54 billion, up 2.3% year over year.
Meanwhile, non-GAAP research & development expenses, as a percentage of revenues, expanded 60 basis points (bps) on a year-over-year basis to 7.1%.
However, non-GAAP selling, general & administrative expenses, as a percentage of revenues, shrank 40 bps year over year to 10.5%.
Operating margin expanded 40 bps year over year to 17.6%.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $1.16 billion as of Mar 31, 2021, compared with $1.51 billion as of Dec 31, 2020.
Net cash provided by operating activities was $536.2 million, up from the $416.5 million recorded in the previous quarter and $266.8 million seen in the year-ago quarter.
Free cash flow was $133 million compared with the previous quarter’s $366 million and the year-earlier quarter’s $75.9 million.
During the fiscal second quarter, the company repurchased shares worth $360 million. Amdocs’ board also approved a quarterly cash dividend payment of 36 cents per share. The dividends will be paid out on Jul 23, 2021.
Moreover, the board authorized an additional repurchase of up to $1 billion of ordinary shares along with the current authorization, which provided for up to $228 million of remaining repurchase authorization by the end of the quarter. The two authorizations now leave the company with $1.228 billion of remaining repurchase authority.
Guidance
Amdocs updated the fiscal 2021 outlook to reflect the divestiture of the OpenMarket business. A positive foreign currency impact of 1% and a 0.5% tailwind from recent acquisitions are expected to be key positives.
The company now anticipates revenues of 1-4% compared with the previous forecast in the range of negative 0.3% to positive 3.7%. At cc, revenues are projected to remain flat or grow 3% year over year versus the earlier projection of negative 1.5% to positive 2.5%.
Adjusted earnings are now estimated to grow between 6% and 9%, up from 4-8% projected earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Amdocs has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Amdocs has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Amdocs (DOX) Up 6.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have added about 6.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amdocs due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Amdocs’ Q2 Earnings Miss Estimates
Amdocs reported second-quarter fiscal 2021 non-GAAP earnings of $1.13 per share. The reported figure missed the Zacks Consensus Estimate of $1.14. However, the figure increased 4.6% year over year.
Revenues of $1.05 billion marginally surpassed the consensus mark of $1.04 billion and remained flat year over year. The top line was negatively impacted by foreign currency headwinds of approximately $1 million.
However, growth of the customer base was a positive.
Amdocs also announced separately that it has acquired technology consultancy firm, Sourced Group, to strengthen its capabilities to aid the cloud transformation of service provider customers. Notably, Sourced Group specializes in large-scale cloud transformations for big players in industries, such as financial services, communications and others.
Quarterly Details
North America revenues (64.8% of total revenues) declined 1.8% year over year to $679.1 million in the reported quarter.
However, Europe revenues (14.2% of total revenues) of $148.8 million inched up 0.3% year over year. Moreover, Rest of the World revenues (21% of total revenues) grew 6% year over year to $220.8 million.
Managed services revenues climbed 5% year over year to $634.6 million.
The company ended the fiscal second quarter with a 12-month backlog of $3.54 billion, up 2.3% year over year.
Meanwhile, non-GAAP research & development expenses, as a percentage of revenues, expanded 60 basis points (bps) on a year-over-year basis to 7.1%.
However, non-GAAP selling, general & administrative expenses, as a percentage of revenues, shrank 40 bps year over year to 10.5%.
Operating margin expanded 40 bps year over year to 17.6%.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $1.16 billion as of Mar 31, 2021, compared with $1.51 billion as of Dec 31, 2020.
Net cash provided by operating activities was $536.2 million, up from the $416.5 million recorded in the previous quarter and $266.8 million seen in the year-ago quarter.
Free cash flow was $133 million compared with the previous quarter’s $366 million and the year-earlier quarter’s $75.9 million.
During the fiscal second quarter, the company repurchased shares worth $360 million. Amdocs’ board also approved a quarterly cash dividend payment of 36 cents per share. The dividends will be paid out on Jul 23, 2021.
Moreover, the board authorized an additional repurchase of up to $1 billion of ordinary shares along with the current authorization, which provided for up to $228 million of remaining repurchase authorization by the end of the quarter. The two authorizations now leave the company with $1.228 billion of remaining repurchase authority.
Guidance
Amdocs updated the fiscal 2021 outlook to reflect the divestiture of the OpenMarket business. A positive foreign currency impact of 1% and a 0.5% tailwind from recent acquisitions are expected to be key positives.
The company now anticipates revenues of 1-4% compared with the previous forecast in the range of negative 0.3% to positive 3.7%. At cc, revenues are projected to remain flat or grow 3% year over year versus the earlier projection of negative 1.5% to positive 2.5%.
Adjusted earnings are now estimated to grow between 6% and 9%, up from 4-8% projected earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Amdocs has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Amdocs has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.