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Solera Holdings

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Solera Holdings (SLH) analysts continue to raise estimates in light of the most recent quarterly earnings surprise.

Thanks to strategic initiatives and anticipated mergers and acquisitions, estimates are showing double-digit growth for the next 2 years. While shares are at an all-time high, this Zacks #1 Rank (Strong Buy) has valuations in line with its industry.

Company Description

Solera Holdings primary business is providing software and services to auto insurance claims processors. The products allow companies to manage the claim process and estimate key values that go into paying out claims.

Net Income Up 16%

On Nov 3 Solera reported first quarter results that showed a 5% increase in revenue, to $159 million. Excluding currency fluctuations, that increase is over 10%, exceeding the high end of the company's forecast.

Earning per share came in at 56 cents, topping the Zacks Consensus Estimate by 6 cents and was up 16% over the previous year. This marked Solera's twelfth consecutive earnings surprise.

Raising Outlook

Solera's management is expecting earnings for the fiscal year ending Jun 2011 will be $2.30, give or take 3 cents. This is up from previous expectations of between $2.15 and $2.22. The midpoint for the revenue projection jumped $25 million, to $669 million.

Analyst estimates are making adjustments to the EPS figure, but are coming in higher on the news. The Zacks Consensus Estimate for this year is up 11 cents, to $2.22.

Next year's estimates are up 9 cents, to $2.48. If current expectations are met the company will be growing at 11% during each year.

Strategic Moves

Back in August Solera announced a strategic initiative to leverage the "Highly Established Markets" segments. The company expects these regions to more than quadruple annual revenue by 2014, to $1 billion. Additionally, Solera is eyeing up as much as $150 million in new investments, ear-marking $40 million for M&A activity.

The Chart

Shares of SLH spiked after the earnings release and continue to set new all-time highs. Even with the surging share price, the P/E multiples and other metrics remain in line with its peers.

Solera Holdings - ticker SLH >

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