It has been about a month since the last earnings report for Amdocs (DOX Quick QuoteDOX - Free Report) . Shares have added about 7.8% 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 catalysts.

Amdocs Q4 Earnings and Revenues Meet Estimates, Rise Y/Y

Amdocs reported fourth-quarter fiscal 2023 results, wherein both earnings and revenues matched the Zacks Consensus Estimates. Moreover, both the top and bottom lines marked a year-over-year improvement as well.

The company reported fourth-quarter non-GAAP earnings of $1.42 per share, which matched the consensus mark and came above the midpoint of management’s guidance of $1.38-$1.44. Quarterly earnings also increased 10.1% from the year-ago quarter’s earnings of $1.29 per share.

Amdocs reported record revenues of $1.24 billion, which also came in line with the consensus mark and were above the midpoint of management’s guidance range of $1.22-$1.26 billion. Compared with the year-ago quarter, revenues were up 6.5% on a reported basis and 6.3% on a constant-currency basis.

Quarterly Details

Amdocs’ top-line performance was primarily driven by continued strength in North America and healthy activity levels among top consumers in Europe.

North America reported record revenues of $834.4 million (67.2% of the total revenues), highlighting a 5% year-over-year increase. Europe revenues (14.1% of the total revenues) of $175.5 million increased 20% year over year. Rest of the World revenues (18.7% of the total revenues) climbed 3% year over year to $232.6 million. Our model estimates for North America and Europe were pegged at $842.8 million and $173.6 million, suggesting growth of 6.1% and 18.6%, respectively, while the Rest of the World was pegged at $224.6 million, suggesting a decline of 0.5%.

Managed services revenues grew 0.5% year over year to $718 million. The company ended the fourth quarter of fiscal 2023 with a 12-month backlog of $4.15 billion, up $10 million sequentially and $180 million year over year. Our model estimates for managed services revenues and backlog were pegged at $736 million and $4.21 billion, respectively.

The non-GAAP operating income increased 7.7% year over year to $221 million, while the operating margin expanded 20 basis points to 17.8%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s continuous focus on improving operational excellence.

Balance Sheet and Cash Flow

Amdocs had cash and short-term investments of $742.5 million as of Sep 30, 2023 compared with $749.5 million as of Jun 30, 2023.

In the third quarter of fiscal 2023, net cash provided by operating activities was $272.3 million, up from $172.6 million in the previous quarter and $217 million in the year-ago period. Free cash flow was $245.8 million compared with the previous quarter’s $144.2 million and the year-earlier quarter’s $135.1 million. In fiscal 2023, the company generated operating cash flow and free cash flow of $822.6 million and $698.3 million, respectively.

The company repurchased shares worth $155 million in the fourth quarter and $490 million in the fiscal 2023.

Amdocs paid out $52 million in dividends during the fourth quarter and $199.5 million in full fiscal 2023. The company’s board has approved a 10% increase in quarterly cash dividend to 47.9 cents per share from 43.5 cents. The increased quarterly cash dividend will be first paid in April 2024 following the shareholder approval in the February 2024 annual general meeting.

Meanwhile, management has declared a quarterly cash dividend of 43.5 cents per share to be payable on Jan 26, 2024, to shareholders of record as of Dec 29, 2023.

FY24 Guidance

For fiscal 2024, the company anticipates revenue growth of 1-5% on a reported basis. On a constant-currency basis, revenues are projected to increase in the band of 1.2-5.2% year over year.

The fiscal 2024 outlook reflects an expected unfavorable foreign currency impact of approximately 0.9% on a year-over-year basis. Adjusted earnings are estimated to grow in the band of 8-12%.

For the first quarter of fiscal 2024, the company projects revenues between $1.225 billion and $1.265 billion and adjusted earnings in the range of $1.53-$1.59 per share.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Amdocs has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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

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 belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, CoStar Group (CSGP Quick QuoteCSGP - Free Report) , has gained 8.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

CoStar reported revenues of $624.67 million in the last reported quarter, representing a year-over-year change of +12.2%. EPS of $0.30 for the same period compares with $0.30 a year ago.

CoStar is expected to post earnings of $0.32 per share for the current quarter, representing a year-over-year change of -15.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for CoStar. Also, the stock has a VGM Score of F.