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Amdocs (DOX) Down 5.7% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have lost about 5.7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Amdocs Earnings and Revenues Beat Estimates in Q1
Amdocs started fiscal 2023 on a strong note by reporting better-than-expected results for the first quarter of fiscal 2023. The company reported first-quarter non-GAAP earnings of $1.45 per share, which surpassed the Zacks Consensus Estimate of $1.32 and came ahead of management’s guidance range of $1.29-$1.35.
Quarterly non-GAAP earnings improved 20.8% from the year-ago quarter’s earnings of $1.20 per share. The robust year-over-year growth in the bottom line was mainly driven by the lower effective tax rate and non-GAAP operating margin improvement on higher revenues.
Quarterly Details
Amdocs reported record revenues of $1.19 billion, which came slightly ahead of the consensus mark of $1.18 billion and more than the midpoint of management’s guidance range of $1.155-$1.195 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 continued strength in North America and healthy activity levels among top consumers in Europe. However, foreign currency movements subdued the figure.
North America reported record revenues of $812.7 million (68.5% of the total revenues), highlighting a 9% year-over-year increase. Europe revenues (14.2% of the total revenues) of $168.7 million increased 18.4% year over year. Rest of the World revenues (17.3% of the total revenues) fell 5.7% year over year to $204.3 million.
Managed services revenues grew 6.1% year over year to $699.8 million. The company ended the first quarter of fiscal 2023 with a 12-month backlog of $4.09 billion, up $120 million sequentially and $260 million year over year.
The non-GAAP operating income increased 8.2% year over year to $209.5 million, while the operating margin expanded 20 bps to 17.7%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s consistent project execution and ongoing efficiency gains.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $734.6 million as of Dec 31, 2022 compared with $573.4 million as of Sep 30, 2022.
In the first quarter of fiscal 2023, net cash provided by operating activities was $83.2 million, down from $216.9 million in the previous quarter and $204.1 million in the year-ago period. Free cash flow was $49.5 million compared with the previous quarter’s $135 million and the year-earlier quarter’s $146.9 million.
In the fiscal first quarter, the company repurchased shares worth $100 million and paid out $47.7 million in dividends. Amdocs’ board approved the new increased quarterly cash dividend rate of 43.5 cents per share. The dividend will be paid out on Mar 31, 2023, to shareholders of record as of Apr 28.
FY23 Guidance Update
Buoyed by strong first-quarter results, DOX raised its revenue and earnings growth guidance for fiscal 2023. For fiscal 2023, the company now anticipates revenue growth of 5-9% on a reported basis, up from the previous guidance range of 4-8%. However, on a constant-currency basis, revenues are still projected to increase in the band of 6-10% year over year.
The updated fiscal 2023 outlook reflects an expected unfavorable foreign currency impact of approximately 1% on a year-over-year basis compared with the previous forecast of 2%. Meanwhile, adjusted earnings are estimated to grow between 9% and 13% compared with the prior projection of 8-12%.
For the second quarter of fiscal 2023, the company projects revenues between $1.2 billion and $1.24 billion and adjusted earnings in the range of $1.44-$1.50 per share. The outlook reflects an expected favorable foreign currency impact of approximately $4 million compared with the first quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Amdocs has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 has been net zero. 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.
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Amdocs (DOX) Down 5.7% 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 5.7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Amdocs Earnings and Revenues Beat Estimates in Q1
Amdocs started fiscal 2023 on a strong note by reporting better-than-expected results for the first quarter of fiscal 2023. The company reported first-quarter non-GAAP earnings of $1.45 per share, which surpassed the Zacks Consensus Estimate of $1.32 and came ahead of management’s guidance range of $1.29-$1.35.
Quarterly non-GAAP earnings improved 20.8% from the year-ago quarter’s earnings of $1.20 per share. The robust year-over-year growth in the bottom line was mainly driven by the lower effective tax rate and non-GAAP operating margin improvement on higher revenues.
Quarterly Details
Amdocs reported record revenues of $1.19 billion, which came slightly ahead of the consensus mark of $1.18 billion and more than the midpoint of management’s guidance range of $1.155-$1.195 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 continued strength in North America and healthy activity levels among top consumers in Europe. However, foreign currency movements subdued the figure.
North America reported record revenues of $812.7 million (68.5% of the total revenues), highlighting a 9% year-over-year increase. Europe revenues (14.2% of the total revenues) of $168.7 million increased 18.4% year over year. Rest of the World revenues (17.3% of the total revenues) fell 5.7% year over year to $204.3 million.
Managed services revenues grew 6.1% year over year to $699.8 million. The company ended the first quarter of fiscal 2023 with a 12-month backlog of $4.09 billion, up $120 million sequentially and $260 million year over year.
The non-GAAP operating income increased 8.2% year over year to $209.5 million, while the operating margin expanded 20 bps to 17.7%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s consistent project execution and ongoing efficiency gains.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $734.6 million as of Dec 31, 2022 compared with $573.4 million as of Sep 30, 2022.
In the first quarter of fiscal 2023, net cash provided by operating activities was $83.2 million, down from $216.9 million in the previous quarter and $204.1 million in the year-ago period. Free cash flow was $49.5 million compared with the previous quarter’s $135 million and the year-earlier quarter’s $146.9 million.
In the fiscal first quarter, the company repurchased shares worth $100 million and paid out $47.7 million in dividends. Amdocs’ board approved the new increased quarterly cash dividend rate of 43.5 cents per share. The dividend will be paid out on Mar 31, 2023, to shareholders of record as of Apr 28.
FY23 Guidance Update
Buoyed by strong first-quarter results, DOX raised its revenue and earnings growth guidance for fiscal 2023. For fiscal 2023, the company now anticipates revenue growth of 5-9% on a reported basis, up from the previous guidance range of 4-8%. However, on a constant-currency basis, revenues are still projected to increase in the band of 6-10% year over year.
The updated fiscal 2023 outlook reflects an expected unfavorable foreign currency impact of approximately 1% on a year-over-year basis compared with the previous forecast of 2%. Meanwhile, adjusted earnings are estimated to grow between 9% and 13% compared with the prior projection of 8-12%.
For the second quarter of fiscal 2023, the company projects revenues between $1.2 billion and $1.24 billion and adjusted earnings in the range of $1.44-$1.50 per share. The outlook reflects an expected favorable foreign currency impact of approximately $4 million compared with the first quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Amdocs has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 has been net zero. 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.