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Amdocs (DOX) Q4 Earnings In Line With Estimates, Issues View

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Amdocs Limited (DOX - Free Report) reported solid fourth-quarter fiscal 2017 results with healthy year-over-year increase in earnings and revenues. On a GAAP basis, earnings improved to $107.2 million or 73 cents per share from $95.7 million or 64 cents in the prior-year quarter, primarily driven by top-line growth.

Non-GAAP earnings for the reported quarter were $137.4 million or 94 cents a share compared with $132.4 million or 89 cents per share in the year-earlier quarter. The figure was in line with the Zacks Consensus Estimate.

For fiscal 2017, GAAP earnings were $436.8 million or $2.96 per share compared with $409.3 million or $2.71 per share in fiscal 2016. Non-GAAP earnings for fiscal 2017 increased to $560.6 million or $3.80 per share from $540.1 million or $3.57 per share in fiscal 2016.

Amdocs Limited Price, Consensus and EPS Surprise

 

Amdocs Limited Price, Consensus and EPS Surprise | Amdocs Limited Quote

Quarterly Performance

Amdocs’ total revenues were record high at $979.7 million compared with $940.7 million in the year-ago quarter. The improvement in revenues was largely attributable to impressive execution across multiple dimensions of its business and continuous project wins. The top line exceeded the Zacks Consensus Estimate of $978 million.

For fiscal 2017, revenues improved to $3,867.2 million from $3,718.2 million in fiscal 2016.

The company’s 12-month order backlog at the end of the fiscal fourth quarter was $3.25 billion, up $30 million from the prior quarter. Non-GAAP operating income was approximately $168.2 million, up 4.4% year over year. Non-GAAP operating margin for the quarter was 17.2%, up 10 basis points year over year. Amdocs maintained stable operating profitability with balanced project delivery and introduction of innovative product offerings in areas such as artificial intelligence and network functions virtualization.

Segmental Results

Managed Service revenues totaled $503.8 million compared with $478.5 million in the year-ago quarter. Customer Experience Systems revenues were $967.7 million compared with $942.9 million in the year-earlier quarter. Systems Directory revenues were $12 million compared with $15.8 million in the year-ago period.

Geographically, revenues from North America were $644.1 million, up 2.9% from the year-ago period. Europe recorded revenues of $129.8 million, up 9.2% year over year. Rest of the World generated revenues of $205.8 million, up 5.2% year over year.

Liquidity

Free cash flow for the fiscal fourth quarter was $165 million. Cash and cash equivalents and short-term interest-bearing investments were $979.6 million at fiscal end compared with $1,095.7 million in the year-ago period.  Cash flow from operations for fiscal 2017 was $636.1 million compared with $620.2 million in the prior fiscal.  

During the quarter, Amdocs repurchased $90 million worth of shares under its share repurchase authorization of $750 million. The company had $256 million worth of shares remaining under this authorization as of Sep 30, 2017. In addition, Amdocs approved a new share purchase authorization to the tune of $800 million and has no expiration date. Management also increased its quarterly dividend from 22 cents to 25 cents per share.   

Financial Outlook

Management expects revenues in the range of $960-$1,000 million in the first-quarter fiscal 2018. Earnings per share (EPS) on a GAAP basis are expected between 66 cents and 74 cents while non-GAAP EPS are projected in the 94 cents-$1.00 range.

For fiscal 2018, the company expects non-GAAP EPS year-over-year growth of 4% to 8% on revenue growth of 0-4%. The guidance is based on the visibility provided by its record 12-month backlog and incorporates the strong momentum in the North American Pay TV market, tempered by slowdown in AT&T’s discretionary spending plans. The company remains committed to return risk-adjusted capital to shareholders through periodic dividend increases and share repurchases.

Zacks Rank & Key Picks

Amdocs currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Acxiom Corporation , CDW Corporation (CDW - Free Report) and DXC Technology Company (DXC - Free Report) , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Acxiom has a long-term earnings growth expectation of 15%. It delivered an average positive earnings surprise of 28.5% in the trailing four quarters, beating estimates thrice.

CDW delivered an average positive earnings surprise of 2.5% in the trailing four quarters, beating estimates twice.

DXC Technology has a long-term earnings growth expectation of 8%. It delivered an average positive earnings surprise of 25.4% in the trailing four quarters, beating estimates in each.  

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