On January 1, Zacks Investment Research upgraded BMC Software Inc. ( BMC - Analyst Report ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

BMC has been witnessing rising earnings estimates following the announcement of decent results in the second quarter of fiscal 2013 and an encouraging guidance for the year. The company is benefiting from an uptrend in the mainframe renewal cycleand the positive seasonality over the next two quarters will continue to work in its favor. IBM's ( IBM - Analyst Report ) zEnterprise EC12 product cycle — which is expected to result in a capacity expansion — will also result in the renewal of business transactions going forward.

BMC Software reported fiscal second quarter 2013 results on November 1, 2013, with non-GAAP net income of 71 cents per share, up from 69 cents in the year-ago quarter. This non-GAAP net income also beat the Zacks Consensus Estimate of 70 cents.

Based on its progress, the company also raised its earnings per share projection for fiscal 2013. BMC expects non-GAAP diluted earnings per share in the range of $3.49 to $3.59 per share. On an average, this would represent a 9.0% increase over fiscal 2012.

The Zacks Consensus Estimate for fiscal 2013 increased 1.4% to $2.86 per share, as most of the estimates were revised higher over the last 90 days. Again, for fiscal 2014, more than half of the estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 3.25% to $3.17 per share.

Other Stocks to Consider

Other software stocks that you could consider include GSE Systems ( GVP - Snapshot Report ) and Nuance Comm ( NUAN - Snapshot Report ) , as both have a Zacks Rank #1 (Strong Buy).