We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Amdocs (DOX) Down 3.5% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have lost about 3.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amdocs due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Amdocs Q3 Earnings Beat, Raises FY22 Guidance
Amdocs reported third-quarter non-GAAP earnings of $1.27 per share, which was toward the higher end of its previously guided range of $1.23-$1.29. Quarterly earnings also beat the Zacks Consensus Estimate by a penny and our estimates by a couple of cents. However, the bottom line declined 5.9% year over year due to the higher effective tax rate.
Record revenues of $1.16 billion matched the consensus mark and came at the midpoint of management’s guided range of $1.14-$1.18 billion. Our estimates for third-quarter revenues were also pegged at $1.16 billion. Compared with the year-ago quarter, revenues were up 8.8% on a reported basis and 10.8% on a constant-currency basis.
Amdocs’ top line was primarily driven by North America’s high activity levels among top consumers. However, unfavorable foreign currency movements subdued the figure.
Quarterly Details
North America reported record revenues of $788 million (68% of total revenues), highlighting a 14.9% year-over-year surge.
Europe revenues (12.5% of total revenues) of $146.1 million decreased 6.2% year over year. Rest of the World revenues (19.5% of total revenues) grew marginally to $226.2 million from $224.5 million in the year-ago quarter.
Managed services revenues jumped 10.4% year over year to $717.9 million.
The company ended the fiscal third quarter of 2022 with a 12-month backlog of $3.95 billion, up $60 million sequentially and $360 million year over year.
Non-GAAP research & development expenses as a percentage of revenues increased 10 basis points (bps) on a year-over-year basis to 7.6%.
Non-GAAP SG&A expenses as a percentage of revenues increased 20 bps year over year to 11%.
The non-GAAP operating margin remained flat on a year-over-year basis at 17.6%.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $850.3 million as of Jun 30, 2022 compared with $856.4 million as of Mar 31, 2022.
In the third quarter, DOX generated operating cash flow of $167 million and free cash flow of $126 million. In the first nine months of fiscal 2022, it generated operating and free cash flows of $540 million and $394 million, respectively.
The company repurchased shares worth $100 million in the third quarter and $401 million in the first nine months of fiscal 2022. During the nine months, it paid out dividends of $138 million. Additionally, Amdocs’ board approved the new increased quarterly cash dividend rate of 39.5 cents per share. The dividends will be paid out on Oct 28, 2022 to shareholders of record as of Sep 30.
Guidance Update
For fiscal 2022, Amdocs now anticipates revenue growth of 6.2-7.2% on a reported basis compared with the previous forecast of 5.2-7.2%. On a constant-currency basis, revenues are projected to increase in the band of 9.6-10.6% year over year compared with the earlier projection of 8-10%.
The updated fiscal 2022 outlook reflects an expected unfavorable foreign currency impact of approximately 1.2% on a year-over-year basis compared with the previous forecast of 0.8%.
Non-GAAP earnings are estimated to grow between 9.6% and 10.9% compared with the prior projection of 7.3% and 10.3%.
For the fourth quarter of fiscal 2022, the company projects revenues between $1,145 million and $1,185 million and non-GAAP earnings in the range of $1.26-$1.32 per share. The outlook reflects an expected sequential unfavorable foreign currency impact of approximately $4 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Amdocs has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Amdocs has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Amdocs (DOX) Down 3.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have lost about 3.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amdocs due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Amdocs Q3 Earnings Beat, Raises FY22 Guidance
Amdocs reported third-quarter non-GAAP earnings of $1.27 per share, which was toward the higher end of its previously guided range of $1.23-$1.29. Quarterly earnings also beat the Zacks Consensus Estimate by a penny and our estimates by a couple of cents. However, the bottom line declined 5.9% year over year due to the higher effective tax rate.
Record revenues of $1.16 billion matched the consensus mark and came at the midpoint of management’s guided range of $1.14-$1.18 billion. Our estimates for third-quarter revenues were also pegged at $1.16 billion. Compared with the year-ago quarter, revenues were up 8.8% on a reported basis and 10.8% on a constant-currency basis.
Amdocs’ top line was primarily driven by North America’s high activity levels among top consumers. However, unfavorable foreign currency movements subdued the figure.
Quarterly Details
North America reported record revenues of $788 million (68% of total revenues), highlighting a 14.9% year-over-year surge.
Europe revenues (12.5% of total revenues) of $146.1 million decreased 6.2% year over year. Rest of the World revenues (19.5% of total revenues) grew marginally to $226.2 million from $224.5 million in the year-ago quarter.
Managed services revenues jumped 10.4% year over year to $717.9 million.
The company ended the fiscal third quarter of 2022 with a 12-month backlog of $3.95 billion, up $60 million sequentially and $360 million year over year.
Non-GAAP research & development expenses as a percentage of revenues increased 10 basis points (bps) on a year-over-year basis to 7.6%.
Non-GAAP SG&A expenses as a percentage of revenues increased 20 bps year over year to 11%.
The non-GAAP operating margin remained flat on a year-over-year basis at 17.6%.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $850.3 million as of Jun 30, 2022 compared with $856.4 million as of Mar 31, 2022.
In the third quarter, DOX generated operating cash flow of $167 million and free cash flow of $126 million. In the first nine months of fiscal 2022, it generated operating and free cash flows of $540 million and $394 million, respectively.
The company repurchased shares worth $100 million in the third quarter and $401 million in the first nine months of fiscal 2022. During the nine months, it paid out dividends of $138 million. Additionally, Amdocs’ board approved the new increased quarterly cash dividend rate of 39.5 cents per share. The dividends will be paid out on Oct 28, 2022 to shareholders of record as of Sep 30.
Guidance Update
For fiscal 2022, Amdocs now anticipates revenue growth of 6.2-7.2% on a reported basis compared with the previous forecast of 5.2-7.2%. On a constant-currency basis, revenues are projected to increase in the band of 9.6-10.6% year over year compared with the earlier projection of 8-10%.
The updated fiscal 2022 outlook reflects an expected unfavorable foreign currency impact of approximately 1.2% on a year-over-year basis compared with the previous forecast of 0.8%.
Non-GAAP earnings are estimated to grow between 9.6% and 10.9% compared with the prior projection of 7.3% and 10.3%.
For the fourth quarter of fiscal 2022, the company projects revenues between $1,145 million and $1,185 million and non-GAAP earnings in the range of $1.26-$1.32 per share. The outlook reflects an expected sequential unfavorable foreign currency impact of approximately $4 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Amdocs has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Amdocs has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.