It has been about a month since the last earnings report for Amdocs (DOX Quick QuoteDOX - Free Report) . Shares have added about 8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Amdocs due for a pullback? 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 Q4 Earnings & Revenues Match Estimates, Up Y/Y

Amdocs reported fourth-quarter fiscal 2022 non-GAAP earnings of $1.29 per share, which matched the Zacks Consensus Estimate while improving 11.2% from the year-ago quarter’s earnings of $1.16 per share. The bottom line was in line with the midpoint of the guided range of $1.26-$1.32.

Record revenues of $1.17 billion matched the Zacks Consensus Estimate and came in slightly above the midpoint of the guided range of $1,145-$1.185 billion. Compared with the year-ago quarter, revenues were up 7.3% on a reported basis and 9.5% on a constant currency basis.

Amdocs’ top-line performance was primarily driven by North America’s high activity levels among top consumers. However, foreign currency movements subdued the figure.

Quarterly Details

North America reported record revenues of $794 million (68.1% of total revenues), indicating a 9.9% year-over-year increase.

Europe revenues (12.6% of total revenues) of $146.4 million increased 0.2% year over year. Rest of the World revenues (19.3% of total revenues) fell 0.2% year over year to $225.7 million.

Managed services revenues jumped 12% year over year to $714.6 million.

The company ended fourth-quarter fiscal 2022 with a 12-month backlog of $3.97 billion, up $0.08 billion sequentially and 7.6% year on year.

Non-GAAP research & development expenses, as a percentage of revenues, expanded 70 basis points (bps) on a year-over-year basis to 8.1%.

Non-GAAP selling, general & administrative expenses, as a percentage of revenues, decreased 60 bps year over year to 10.3%.

Non-GAAP operating margin expanded 10 bps sequentially to 17.6%.

Balance Sheet and Cash Flow

Amdocs had cash and short-term investments of $573.4 million as of Sep 30, 2022 compared with $856.4 million as of Mar 31, 2022.

During fourth-quarter fiscal 2022, net cash provided by operating activities was $216.9 million, up from $168.9 million in the previous quarter and $199.7 million in the year-ago period. Free cash flow was $135 million compared with the previous quarter’s $121.6 million and the year-earlier quarter’s $138.8 million during the same time frame.

During fiscal 2022, net cash provided by operating activities was $757 million while free cash flow was $530 million.

During the fiscal fourth quarter, the company repurchased shares worth $108 million. Amdocs’ board approved the new increased quarterly cash dividend rate of 39.5 cents per share. The dividends will be paid out on Jan 27, 2023, to shareholders of record as of Dec 30.

Full-Year Highlights

Amdocs reported record revenues of $4.58 billion in full fiscal 2022, up 10.3% year over year on a constant currency basis and 6.7% on a reported basis.

Non-GAAP diluted earnings were $5.30 per share, indicating an increase of 10.2% year over year.

Guidance 2023

For fiscal 2023, Amdocs anticipates revenue growth of 4-8% on a reported basis while on a constant currency basis, revenues are projected to increase in the band of 6-10% year over year.

The updated fiscal 2022 outlook reflects an expected unfavorable foreign-currency impact of approximately 2% on a year-over-year basis compared with the previous forecast of 0.8%.

Adjusted earnings are estimated to grow between 8% and 12% compared with the prior projection of 7.3% and 10.3%.

For the first quarter of fiscal 2023, the company projects revenues between $1,155 million and $1,195 million and adjusted earnings in the range of $1.29-$1.35 per share. The outlook reflects an expected unfavorable foreign-currency impact of approximately $7 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -6.3% due to these changes.

VGM Scores

Currently, Amdocs has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Amdocs has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Amdocs is part of the Zacks Computers - IT Services industry. Over the past month, Epam (EPAM Quick QuoteEPAM - Free Report) , a stock from the same industry, has gained 10.3%. The company reported its results for the quarter ended September 2022 more than a month ago.

Epam reported revenues of $1.23 billion in the last reported quarter, representing a year-over-year change of +24.1%. EPS of $3.10 for the same period compares with $2.42 a year ago.

For the current quarter, Epam is expected to post earnings of $2.68 per share, indicating a change of -2.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.

Epam has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.