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Can ANSYS (ANSS) Retain its Beat Streak in Q1 Earnings?

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ANSYS, Inc. (ANSS - Free Report) is scheduled to report first-quarter 2021 results on May 5.

The company expects non-GAAP earnings to be 73-90 cents per share for first-quarter 2021. The Zacks Consensus Estimate for first-quarter earnings is pegged at 85 cents per share, having been revised upward by a penny in the past 30 days. The figure indicates an improvement of 2.4% from the year-ago reported figure.

Non-GAAP revenues are anticipated between $335 million and $360 million. The consensus mark for revenues is pegged at $352.75 million, which suggests growth of 14.2% from the prior-year quarter’s levels.

Notably, the company has a trailing four-quarter earnings surprise of 16.48%, on average.

ANSYS, Inc. Price and EPS Surprise

ANSYS, Inc. Price and EPS Surprise

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

Factors to Note

ANSYS’ simulation solutions are likely to have witnessed healthy adoption in the recovering defense, high tech, automotive and semiconductor end-markets owing to gradual reopening of economies as shelter-in-place guidelines ease across several countries. This is expected to have contributed to the sustained momentum in recurring revenues and the company’s first-quarter top-line performance.

Moreover, gains from increased chip design activity is expected to get reflected in the company’s first-quarter performance. Markedly, the company clinched an eight-figure multi-year deal with a notable North American semiconductor company, which is a testament to strength in its solutions.

The deal wins in defense vertical across North America and EMEA also remain noteworthy. 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 $236 million, which indicates growth of 8.7% from the year-ago quarter.

Meanwhile, the consensus mark for Software licenses revenues is pegged at $101 million, which suggests an improvement of 15% from the prior-year quarter’s levels.

Continued momentum 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.

Likewise, growing clout of digital twins and process optimization solutions is likely to have acted as a tailwind. Also, the company unveiled its most recent version of its product portfolio — Ansys 2021 R1 — to enable clients to accelerate innovation.

Synergies from the buyout of Analytical Graphics is likely to get reflected in the first-quarter top line. Notably, Analytical Graphics is engaged in providing analysis and simulation solutions for defense and aerospace verticals including critical missions like satellite launches. The deal is expected to add $75-$85 million to the top line (non-GAAP) in 2021.

Also, new business gains 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 first-quarter performance.

Markedly, 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.

However, coronavirus crisis-induced weakness in the oil and gas industry might have weighed on the to-be-reported quarter’s performance.

Further, increasing expenditures on product enhancements, acquisitions, and Research and Development (R&D) are likely to have impeded margin expansion in the first quarter. Also, sluggish spending across small and medium size businesses owing to the ongoing pandemic may have acted as an headwind.

What Our Model Says

Our proven model predicts 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.

ANSYS has an Earnings ESP of +7.42% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some other stocks worth considering as our proven model shows that these too have the right combination of elements to beat on earnings this season.

Vishay Intertechnology, Inc. (VSH - Free Report) has an Earnings ESP of +5.22% and a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Synaptics Incorporated (SYNA - Free Report) has an Earnings ESP of +1.60% and a Zacks Rank of 2 currently.

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