Keynote Systems, Inc.
) has seen big gains over the last 12 months, recently hitting a new all-time high after reporting strong Q3 results that included a hefty 25% earnings surprise. With an average earnings surprise of 40% over the last four quarters and estimates on the rise, this Zacks #1 Rank stock is floating with momentum.
Keynote Systems, Inc provides Internet and mobile cloud monitoring solutions worldwide. The company was founded in 1995 and has a market cap of $350 million.
With Keynote growing its presence in the very hot cloud computing space, demand for the company's services has been surging. That showed up in its strong Q3 results from late July that came in well ahead of expectations.
Revenue for the period was a record, up 25% from last year to $26.6 million. Earnings also looked great, coming in at 25 cents, 25% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 40% over the last three quarters.
The company is divided into two major segments, Mobile and Internet, with each side generating about 50% of total revenue. But the good quarter was driven by sharp gains in Mobile, with revenue up 67% from last year to $13.4 million.
Pristine Balance Sheet
Keynote also has a pristine balance sheet, with cash and short-term investments up 53% from last year to $92 million against no long-term debt.
We saw some pretty solid movement in estimates off the good quarter, with the current year adding 12% to $1.01.
But in spite of the gains, the valuation for a technology and cloud stocks looks reasonable, with its forward P/E of 21X in line with its peers.
On the chart, KEYN recently jumped into a new multi-year high on the good quarter before pulling back a bit with the market. Look for support from the long-term trend. Take a look below.
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.