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ANSYS (ANSS) Stock Surges 33.5% YTD: Will the Trend Continue?
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ANSYS (ANSS - Free Report) is witnessing healthy momentum this year so far. The shares of the company have gained 33.5% year to date compared with the sub-industry’s growth of 21.1%.
The company is a leading developer of engineering simulation software and services widely used by engineers, designers and researchers across a broad spectrum of industries and academia.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The increase in share price is driven by the company’s robust financial performance. The company came up with an impressive performance in second-quarter fiscal 2023.
The company reported second-quarter 2023 earnings per share (EPS) of $1.60, beating the Zacks Consensus Estimate by 7.4%. The bottom line declined 9.6% year over year. Non-GAAP revenues of $496.6 million surpassed the Zacks Consensus Estimate by 1.1%. The top line increased 4% (up 5% at constant currency or cc) from the year-ago quarter.
The company’s performance is being driven by continued strength in the aerospace and defense sector owing to government-led programs and digital transformation bodes well. Also, it is likely to benefit from rapid growth in the high-tech industry, led by ongoing development in artificial intelligence and machine learning.
The company continues to launch new products to tap the rapid adoption of Internet of Things in the manufacturing industry. In June, the company expanded the capabilities of its Ansys Discovery platform by incorporating high-frequency electromagnetics modeling for antennas. This development allows engineering teams to conduct virtual exploration of multiple design areas simultaneously, minimizing the need for costly physical prototyping and testing.
Aggressive acquisition strategy has played a pivotal part in developing the company’s business in the last few years. In June 2023, management acquired Diakopto, a provider of Electronic Design Automation solutions for integrated circuit development. The acquisition is expected to enable design engineers to "shift left," detecting interconnect parasitic problems early in the design cycle and minimizing costly iterations in the design cycle.
ANSYS’ 2023 and 2024 revenues are anticipated to rise 10.6% and 9.2% year over year, respectively. The company’s earnings are expected to increase 8.3% and 12% on a year-over-year basis in 2023 and 2024, respectively.
ANSS outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 10.9%, on average. The long-term EPS growth rate stands at 8.1%.
On the flip side, geopolitical instability, forex volatility and weakness in global macroeconomic conditions are likely to affect ANSYS’ performance as clients cut back on expenditure. Rising costs on product enhancements, acquisitions, and research and development are likely to exert pressure on margin expansion.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 15.9% in the past 60 days to $4.15.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 27.2% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 10% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 6.3% in the past 60 days to $2.86.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 63.7% in the past year.
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ANSYS (ANSS) Stock Surges 33.5% YTD: Will the Trend Continue?
ANSYS (ANSS - Free Report) is witnessing healthy momentum this year so far. The shares of the company have gained 33.5% year to date compared with the sub-industry’s growth of 21.1%.
The company is a leading developer of engineering simulation software and services widely used by engineers, designers and researchers across a broad spectrum of industries and academia.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The increase in share price is driven by the company’s robust financial performance. The company came up with an impressive performance in second-quarter fiscal 2023.
The company reported second-quarter 2023 earnings per share (EPS) of $1.60, beating the Zacks Consensus Estimate by 7.4%. The bottom line declined 9.6% year over year. Non-GAAP revenues of $496.6 million surpassed the Zacks Consensus Estimate by 1.1%. The top line increased 4% (up 5% at constant currency or cc) from the year-ago quarter.
The company’s performance is being driven by continued strength in the aerospace and defense sector owing to government-led programs and digital transformation bodes well. Also, it is likely to benefit from rapid growth in the high-tech industry, led by ongoing development in artificial intelligence and machine learning.
The company continues to launch new products to tap the rapid adoption of Internet of Things in the manufacturing industry. In June, the company expanded the capabilities of its Ansys Discovery platform by incorporating high-frequency electromagnetics modeling for antennas. This development allows engineering teams to conduct virtual exploration of multiple design areas simultaneously, minimizing the need for costly physical prototyping and testing.
Aggressive acquisition strategy has played a pivotal part in developing the company’s business in the last few years. In June 2023, management acquired Diakopto, a provider of Electronic Design Automation solutions for integrated circuit development. The acquisition is expected to enable design engineers to "shift left," detecting interconnect parasitic problems early in the design cycle and minimizing costly iterations in the design cycle.
ANSYS’ 2023 and 2024 revenues are anticipated to rise 10.6% and 9.2% year over year, respectively. The company’s earnings are expected to increase 8.3% and 12% on a year-over-year basis in 2023 and 2024, respectively.
ANSS outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 10.9%, on average. The long-term EPS growth rate stands at 8.1%.
On the flip side, geopolitical instability, forex volatility and weakness in global macroeconomic conditions are likely to affect ANSYS’ performance as clients cut back on expenditure. Rising costs on product enhancements, acquisitions, and research and development are likely to exert pressure on margin expansion.
Stocks to Consider
Some better-ranked stocks in the broader technology space are Woodward (WWD - Free Report) , Aspen Technology (AZPN - Free Report) and Badger Meter (BMI - Free Report) . Woodward presently sports a Zacks Rank #1 (Strong Buy), whereas Aspen Technology and Badger Meter currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 15.9% in the past 60 days to $4.15.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 27.2% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 10% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 6.3% in the past 60 days to $2.86.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 63.7% in the past year.