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ANSYS (ANSS) to Report Q4 Earnings: What's in the Offing?

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ANSYS, Inc. (ANSS - Free Report) is slated to release fourth-quarter 2020 results on Feb 24.

The company expects non-GAAP earnings to be $2.36-$2.67 per share for fourth-quarter 2020. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $2.51 per share, unchanged in the past 30 days. The figure indicates an increase of 12.1% from the year-ago quarter’s reported figure.

Non-GAAP revenues are anticipated between $542.3 million and $582.3 million. The consensus mark for revenues is at $562.4 million, which suggests growth of 14.2% from the prior-year quarter’s levels.

ANSYS, Inc. Price and EPS Surprise

 

ANSYS, Inc. Price and EPS Surprise

ANSYS, Inc. price-eps-surprise | ANSYS, Inc. Quote

 

Notably, the company has a trailing four-quarter positive earnings surprise of 15.13%, on average.

The company’s shares have rallied 33% in the past year compared with the industry’s growth of 27.4%.

Factors Likely to Have Influenced Q4 Performance

ANSYS’ simulation solutions are likely to have witnessed healthy adoption in the recovering high-tech and automotive market due to gradual reopening of economies as shelter-in-place guidelines ease across several countries. This is expected to have added to the company’s fourth-quarter top line performance.

Further, ANSYS’ fourth-quarter performance is expected to benefit from gains from increased chip design activity. Continued strength across the aerospace & defense, semiconductor, and communication end-markets, owing to increasing adoption of 5G infrastructure and cloud computing is anticipated to have positively impacted top line in the to-be-reported quarter results.

Furthermore, growing clout of digital twins and process optimization solutions is likely to have acted as a tailwind.

Also, in the third quarter 2020 earnings conference, management noted that it expects Europe, Middle East and Africa (EMEA) to witness strong revenue growth in the fourth quarter owing to timing of big deals. Increasing clientele base and pipeline strength is expected to have contributed to annual contract value (ACV) in the quarter under review.

Notably, the Zacks Consensus Estimate for Maintenance and service revenues is pegged at $239 million, which indicates growth of 10.1% from the year-ago quarter’s reported figure.

Meanwhile, the consensus mark for Software licenses revenues is pegged at $314 million, which suggests a rise of 16.7% from the prior-year quarter’s levels.

Synergies from its collaborations with Microsoft (MSFT - Free Report) and Rockwell Automation are likely to have aided the company acquire more customers. This, in turn, is expected to have benefited fourth-quarter performance.

In October 2020, ANSYS partnered with Microsoft to incorporate its simulation solutions with the latter’s Azure platform, digital twins, high performance computing and IoT services. This will enable engineers to cut down on development costs and slash time to market for a product.

Nevertheless, coronavirus crisis-induced weakness in the oil and gas industry and low oil prices continue to plague the global energy markets, which might have had a negative impact on the to-be-reported quarter’s performance.

Increased expenditures on product enhancements and Research and Development (R&D) are likely to have put pressure on margins in the fourth quarter. Also, sluggish spending across small and medium size businesses owing to the ongoing pandemic may have acted as an overhang.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for ANSYS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

ANSYS has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are some stocks worth keeping a tab on, as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

CrowdStrike (CRWD - Free Report) has an Earnings ESP of +55.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Workday (WDAY - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #2.

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